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cooling inflation drove domestic consumption. 

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort, said in an e-mail that first-quarter GDP likely expanded by 6.3%. 

He said he expected household spending to have grown by 5% in the first three months of 2025 versus 4.7% last year, supported by “benign” inflation.  

In the first quarter, inflation averaged 2.2%, well within the central bank’s 2-4% target range. 

Mr. Ricafort said consumption may have been driven by “among the strongest employment data in nearly 20 years, continued growth in overseas Filipino workers’ remittances, business process outsourcing revenues, [and] tourism receipts.” 

However, some analysts expect growth in the January-to-March period to settle below 6%. 

Moody’s Analytics economist Sarah Tan said the economy may have expanded by 5.5% in the first quarter. 

“Private consumption should lift 5.2% year on year, supported by lower borrowing costs as the effect of monetary policy easing filters through the economy. That will ease the pressure on household budgets,” Ms. Tan said in an e-mailed statement on April 11. 

The Bangko Sentral ng Pilipinas paused its easing cycle in February but cut rates by 25 basis points at the April 10 meeting. This brought the target reverse repurchase rate to 5.5% from 5.75% previously. 

Ser Percival K. Peña-Reyes, director of the Ateneo Center for Economic Research and Development, said in a Viber message that “construction, transport and storage, and accommodation and food service activities” likely drove GDP expansion to 5.4% in the first quarter. 

He said household consumption may have grown by 4.6% in the January-to-March period. 

Asked for the reason of a relatively slower GDP projection, Mr. Peña-Reyes said that elections no longer provide a significant boost to Philippine growth. 

Mr. Balisacan earlier said that election spending would likely be “muted” compared with previous elections as more candidates are allocating more of their campaign funds on social media ads.  

Tariff threat 

Meanwhile, the outlook for the second quarter may be clouded by the turmoil caused by US President Donald J. Trump’s tariff policies. 

Mr. Trump on April 9 paused the new reciprocal tariffs for 90 days, although the baseline 10% tariff on almost all US imports remained in effect. The Philippines faced a 17% reciprocal tariff, which was the second lowest among Southeast Asian countries. 

“The immediate risk to the outlook for the rest of 2025 will be slowing export growth due to the hike in US tariffs. These make the Philippines’ goods to the US more costly and less competitive, which is concerning because the US is the Philippines’ largest export destination,” Ms. Tan said. 

She also noted that escalating tensions between the US and its trading partners could dampen external demand for the country’s goods, potentially slowing production. 

“We expect the Philippines to expand 5.8% this year, but this could be revised lower should the heightened US-China trade war cause significant disruptions to the global economy,” Ms. Tan said. 

The Philippines exported USD12.14 billion worth of goods to the US in 2024. 

Mr. Ricafort said the easing inflation trend would justify further rate cuts “that would fundamentally lead to faster GDP than otherwise.” 

“However, offsetting risk factors include US President Trump’s higher US import tariffs, reciprocal tariffs, and other protectionist policies that could slightly reduce GDP growth starting the second quarter 2025,” Mr. Ricafort said.  

Despite the tariff threats, he said second-quarter growth could still reach 6%, driven by election spending. 

Ms. Tan anticipates an increase in government spending ahead of the midterm elections on May 12. 

Mr. Peña-Reyes said he sees the economy expanding by 5.9% in the second quarter, as well as the full year. 

Mr. Balisacan has said it may be too early to revise the full-year growth targets in the Development Budget Coordination Committee’s meeting in May. 

However, he said the upper end of the 6-8% target may be unrealistic to hit amid global uncertainty over the US tariff policy.  – Aubrey Rose A. Inosante, Reporter 

Shifting trade routes amid tit-for-tat tariffs would likely occur within Southeast Asia, Oxford Economics said, though this may not necessarily benefit the Philippines due to its poor logistics sector.

“The Philippines and Malaysia might also be able to capture some of the diverted trade flows looking to avoid ports with higher tariffs. They have the next two lowest tariff rates in the region, which are also below the global average of 27%,” it said at a research briefing.

“That said, the Philippines will probably not gain much from re-routing given its less developed trade logistics sector.”

In early April, US President Donald J. Trump announced higher reciprocal tariffs on most of its trading partners.

Southeast Asia was hit with some of the highest duties, though the Philippines was slapped with a 17% tariff, the second lowest in the region, just after Singapore.

However, Mr. Trump suspended the reciprocal tariffs for 90 days starting April 9 but implemented the 10% baseline tariff for all. The suspension would be lifted in July.

Oxford Economics said that the Association of Southeast Asian Nations (ASEAN) will likely undergo a “reordering of shipping routes” within the region.

“The ‘Liberation Day’ tariffs announced by US President Trump have been postponed. But they will have significant consequences for ASEAN if they are eventually implemented.”

“Given the extreme uncertainty, high fixed-asset investment costs, and the region’s strong labor cost advantages, we doubt ASEAN supply chains can adjust quickly,” it added.

Some businesses could opt to soften the impact of the higher tariffs by shifting production to locations slapped with lower tariffs.

“But not all businesses have diversified production bases and relocation costs are enormous. Also damaging is the hit from extreme trade policy uncertainty, which will lower business investment even if tariff hikes are eventually reduced or scrapped.”

“Lower-tariffed economies with transshipment capabilities could benefit. That said, a key risk is the potential for disruption to supply chains. A supply glut may arise as orders are canceled, while transportation capacity could also be strained.”

In the region, countries with the higher tariffs include Cambodia, Laos, Myanmar and Vietnam. Meanwhile, those that are “moderately exposed” to the US are Malaysia and Thailand.

“The relatively larger size of domestic spending in the Philippines buffers its economy against external volatility from an almost 20% export exposure to the US,” it added.

In 2024, the US was the top destination for Philippine exports, accounting for 17% of the total.

“Tariff rate differential considerations are key to production decisions. Companies with facilities in different economies could tap existing and available capacity in lower-tariff economies to fulfill production orders.”

However, the global economic advisory firm noted that not all companies have diversified production bases.

“Relocating or setting up new facilities typically involves significant fixed investment, even to lower-tariffed economies. The time needed to set up in new locations could stretch over several years, especially in sectors that require more complex facilities.”

Oxford Economics said the region’s “comparative advantage in the production of these goods should persist even with higher tariff rates.”

“This is particularly the case for lower value-added, labor-intensive manufacturing processes, such as the assembly of electricals or cut-and-trim processes for textiles, which some ASEAN economies dominate.”

“Given the labor-intensive nature of these processes, the large wage differential between the US and ASEAN economies is a core driver of the region’s competitive edge.”

In the medium term, Oxford Economics said it is unlikely that companies in ASEAN will reshore to the United States.

“Labor costs in the US are prohibitively high for the labor-intensive processes dominant in ASEAN. The region also benefits from economies of scales as an existing production hub.”

To cushion the impact of tariff hikes, ASEAN economies could consider lowering trade barriers on US goods.

“However, given the already low effective tariff on US goods relative to those imposed by the US, it’s unclear by how much these reciprocal tariffs will be lowered.”

ASEAN countries can also seek to ramp up US imports, it said.

“This was a method employed by China when Trump raised tariffs during his first term. However, it’s unlikely ASEAN will manage to do so in a manner that significantly reduces the US trade deficit.”

“The ASEAN consumer market is far smaller than that of the US given the sheer difference in income. This is also why we think the removal of what the US administration considers to be non-trade barriers isn’t likely to change much.”

Economies in the region can also invest more in the United States, it added.

“This approach is taken by Northeast Asian economies like South Korea. and Japan. But it’s probably not viable for ASEAN since most producers are foreign owned.” — Luisa Maria Jacinta C. Jocson

Money sent home by migrant Filipinos rose by 2.7% year on year in February, the slowest in nine months, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Cash remittances from overseas Filipino workers (OFWs) coursed through banks increased to USD 2.72 billion from USD 2.65 billion in the same month in 2024.

The growth in February remittances was slower than the 2.9% rise in January, and the slowest since the 2.5% growth in June 2024.

Cash remittances from land-based workers went up by 3% to USD 2.19 billion, while money sent home by sea-based workers inched up by 1.2% to USD 520 million

For the first two months of the year, cash remittances jumped by 2.8% to USD 5.63 billion, from USD 5.48 billion a year ago. The bulk came from land-based workers at USD 4.52 billion, up 3.2% from a year ago, while the rest came from sea-based workers at USD 1.11 billion, up 1% from a year ago.

“The growth in cash remittances from the United States, Saudi Arabia, Singapore, and the United Arab Emirates (UAE) mainly contributed to the increase in remittances in January-February 2025,” the BSP said.

The United States was the main source of cash remittances with a 40.9% share of the total so far this year. It was followed by Singapore (7.6%), Saudi Arabia (6%), Japan (5.2%), the United Kingdom (4.8%), the UAE (4%), Canada (3.2%), Taiwan (2.9%), Qatar (2.8%) and Hong Kong (2.6%).

Meanwhile, personal remittances, which include inflows in kind, rose by 2.6% to USD 3.02 billion in February from USD 2.95 billion a year ago.

Personal remittances from workers with contracts of one year or more increased by 2.8% to USD 2.37 billion in February, while those from workers with contracts of less than a year went up by 2% to USD 580 million.

In the January-February period, personal remittances grew by 2.7% to USD 6.27 billion from USD 6.1 billion a year earlier.

For the two-month period, personal remittances from workers with contracts of one year or more jumped by 2.9% to USD 4.89 billion, while those from workers with contracts of less than one year increased by 2.2% to USD 1.23 billion.

“The continued single-digit growth (in remittances) nevertheless is still a good signal/bright spot for the overall economy as an important growth driver, especially in terms of consumer spending, which accounts for nearly 75% of the Philippine economy,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

“The net increase in the US dollar versus the peso by about 12% over the past three years would require the sending of lower amount of remittances to pay for the amount of expenses in pesos but higher prices since 2022,” he added.

The peso strengthened by 37 centavos to close at PHP 57.995 per dollar on Feb. 28 from its PHP 58.365 finish on Jan. 31.

“The modest remittance growth reflects a mix of seasonal normalization after the holiday surge and the impact of forex dynamics, particularly the stronger PHP in that period, which may have affected remittance behavior,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

Mr. Rivera said slower global growth and “labor market adjustments” tempered the rise in remittances in February.

“Moving forward, remittances are likely to remain resilient, supported by stable overseas employment and the continued demand for OFWs. However, geopolitical risks, currency volatility, and potential slowdowns in advanced economies may keep growth moderate in the coming months,” he added.

The US government’s protectionist policies, as well as stricter immigration rules, may also weigh on remittances from US-based OFWs, Mr. Ricafort said.

“The Trump administration could tighten immigration rules in the US in an effort to create and protect more jobs for US citizens, thereby potentially slowing down OFW remittances from the US,” he said.

“Trump’s threats of higher tariffs/reciprocal tariffs and other America-first policies could also slow down global trade, investments, employment including some OFW jobs, and overall world economic/GDP growth, thereby also indirectly slowing down the growth in OFW remittances from other countries around the world.” — AMCS

THE Philippines is poised to become the second-fastest growing economy in the region this year, but the US tariff policy may drive gross domestic product (GDP) growth to below 6%, the ASEAN+3 Macroeconomic Research Office (AMRO) said.

“For now, our various scenarios of tariff actions, as per the ‘Liberation Day’ and ‘pause’ scenarios, growth in the Philippines will be negatively affected and likely will fall below 6%,” AMRO Group Head and Principal Economist Allen Ng said at a briefing.

US President Donald J. Trump announced higher reciprocal tariffs on most of its trading partners, with Southeast Asian countries slapped with some of the highest duties. Last week, he suspended the reciprocal tariffs for 90 days but implemented the 10% baseline tariff for all.

The Philippines is still facing US duties of 17% once the suspension is lifted in July, although this is the second lowest among Association of Southeast Asian Nations (ASEAN).

AMRO Chief Economist Hoe Ee Khor said the tariff impact on the Philippines will be “much lower.”

“The Philippines is a service-oriented economy. The manufacturing sector is less important… but it’s a much smaller share of the economy compared with the other ASEAN countries. So, because of that, I think the tariff impact on the Philippines will be much lower,” Mr. Khor said at a virtual briefing on Tuesday.

“We think that the Philippine economy generally will emerge from this tariff war quite well,” he added.

AMRO on Tuesday released its Regional Economic Outlook quarterly update, which includes forecasts finalized prior to Mr. Trump’s announcement of the “Liberation Day” tariffs on April 2.

In the report, the regional think tank said Philippine GDP is projected to expand by 6.3% this year, unchanged from the forecast in January. It is the second-fastest forecast among ASEAN, after Vietnam’s 6.5%.

For 2026, AMRO sees the Philippines growing by 6.3%, the fastest among ASEAN and slightly higher than Vietnam’s 6.2%.

AMRO’s baseline forecasts show Philippine growth will settle above the ASEAN average of 4.7% this year and 2026, driven by “robust domestic demand.”

“Growth is expected to ease in 2025-2026, following the strong export recovery in 2024. Indonesia, the Philippines, Vietnam, and Cambodia are projected to lead growth in the subregion, growing above the ASEAN average,” it said.

AMRO expects ASEAN+3 (including China, Hong Kong, Japan and South Korea) to grow by 4.2% this year and 4.1% in 2026.

“ASEAN+3 is set to remain a key driver of global growth in the medium term. The region is forecast to expand by an average of 4.3% in 2025-2030, outpacing global growth of 3.2%,” it said.

However, more aggressive protectionist policies from the US would hurt the region’s growth.

“The disorderly escalation of trade tension driven by erratic US trade policies could upend the anticipated steady growth path of the region,” it said.

AMRO said it will update the baseline forecasts in the coming months to reflect the impact of the US tariffs.

Weakest growth since COVID

Meanwhile, Mr. Trump’s global tariffs would cut Asia’s economic growth to the weakest since the COVID-19 pandemic, according to AMRO.

If America’s so-called reciprocal levies are implemented, growth across Asia would slow to 3.8% this year and 3.4% next year, AMRO said.

The 2025 estimate includes Mr. Trump’s “Liberation Day” charges on all nations that he subsequently paused, but not the recently announced temporary exemption for certain products including smartphones and electronics.

That forecast compares with a 4.2% baseline without tariffs and would mark the slowest pace of growth since it slumped to 3.3% in 2022.

While some countries may be hit harder given how much they rely on exports to the US — such as Vietnam and Cambodia — the region can mitigate the impact by easing monetary policy and boosting fiscal spending, according to the Singapore-based group.

“They’ll take policy responses to mitigate it,” said Mr. Khor. “The region is pretty resilient because they’ve accumulated reserves over the years and are more flexible in terms of the exchange rate,” he said, adding that inflation is tame, leaving space for central banks to cut policy rates.

Asia is set to be the hardest hit by Mr. Trump’s protectionist push, given the escalating charges on China and how integrated supply chains are across the region. Officials from Vietnam to Japan have been seeking exemptions and promising concessions across meetings with counterparts in the US.

Some central banks have already started cutting interest rates, flagging risks to the growth outlook, including the Reserve Bank of India last week, whose members signaled additional easing in coming months.

Meanwhile, the 145% levies announced this year on China and retaliatory duties on the US mean trade is set to plummet between the two nations.

That impact is likewise “manageable” for China since the nation’s share of exports to the US makes up a shrinking share of domestic GDP, according to AMRO. The bigger risk, meanwhile — that the two economies will fully decouple — isn’t likely, Mr. Khor said. “Decoupling is basically all imports and exports” down to zero, he said. “That’s an extreme scenario that won’t happen.”

If implemented, US tariffs on Asia would rise to an average 26% excluding China, according to AMRO. About 15% of the region’s total exports currently head to the US, accounting for about 4% of GDP. — ARAI with Bloomberg

The  Department of Trade and Industry (DTI) said that business will continue as usual as the government awaits the final tariff rate that the US will impose on Philippine goods.

“For now, it is 10% for everyone for 90 days. After the 90 days, that is when we will see what the tariffs will be,” DTI Secretary Ma. Cristina A. Roque told reporters in mixed English and Filipino on Tuesday.

Last week, US President Donald J. Trump announced a 90-day pause on the higher reciprocal tariffs on most of the country’s trading partners.

Association of Southeast Asian Nations (ASEAN) member countries are facing some of the highest duties. Cambodia is facing a 49% tariff, followed by Laos (48%), Vietnam (46%), Myanmar (44%), Thailand (36%), Indonesia (32%), Malaysia (24%), and Brunei (24%).

The Philippines was slapped with a 17% tariff, which is the second lowest after Singapore’s baseline rate of 10%.

While a 90-day pause is in place, countries including the Philippines will face a blanket 10% duty until July.

“For those that have orders already, it is business as usual,” Ms. Roque said.

She said she is still hoping to meet her US counterparts before the 90-day pause ends “so that we can really discuss the tariff rate of the Philippines.”

“If the tariff of 17% will be reimposed after 90 days and the tariffs of our ASEAN neighbors are higher than ours, of course, that’s advantageous for us. But we don’t know what will happen after 90 days. So, it’s hard to speculate until we get to talk to my counterpart there in the US,” she added.

The US was the country’s top export market last year, accounting for USD 12.14 billion, data from the Philippine Statistics Authority showed.

Of the total, 53% or USD 6.43 billion were electronic products. These include USD 3.79 billion worth of semiconductor exports.

In a presidential memorandum on April 11, the US clarified that semiconductors are exempt from the local tariffs.

However, Mr. Trump said on Sunday that he is looking at announcing tariff rates on imported semiconductors over the next week.

A notice in the Federal Register showed that the US Secretary of Commerce has initiated an investigation to determine the effects of semiconductor imports on national security.

In light of this, the Philippine Trade secretary said that the government will always try to negotiate for what is best for the country.

“That is what we want to happen. But for the semiconductor, it is business as usual because some of them already have orders that are already being shipped. So, it is still business as usual for now,” she added.

Meanwhile, Philippine Institute for Development Studies Emeritus Research Fellow Rafaelita M. Aldaba said that the US’ reciprocal tariffs are likely “to trigger significant exposure risks with asymmetric impacts on developing countries.”

She said this will depend on the country’s export composition, dependence on US markets, and capacity to adjust trade and production structures.

“For smaller economies like the Philippines, the new tariff regime presents both an opportunity and a challenge. The relatively lower tariff rate creates openings for niche export expansion, particularly in sectors with tight price margins and high tariff sensitivity,” she added.

Citing an independent analysis, Ms. Aldaba said that at the current exemption coverage, the Philippines’ tariff cost is expected to reach USD 1.8 billion.

Meanwhile, tariff costs in Vietnam are expected to reach USD 53.9 billion, USD 18.9 billion for Thailand, USD 8.6 billion for Indonesia, and USD 7.5 billion for Malaysia.

“The Philippines is the least exposed among the five ASEAN countries analyzed. It faces the lowest reciprocal tariff rate of 17%, and about 30% of its US exports are exempted, especially high-value electronics and semiconductors,” Ms. Aldaba, a former DTI undersecretary, said.

“While non-exempted goods like garments, processed foods, and wood products still account for around 12.4% of total exports, these are generally thin-margin, labor-intensive goods that do not dominate trade value,” she added.

Further, she said that the Philippines is “well-positioned” to attract trade relocation from high-tariff countries, especially for price-sensitive sectors like apparel, furniture, and food processing.

“Compared to its regional peers, the Philippines benefits from a relatively lower reciprocal tariff rate, offering a strategic opening to enhance its export competitiveness, attract reconfigured global supply chains, and amplify its strengths in digital and service-driven industries,” she said.

“The Philippines should strategically capitalize on its lower tariff rate by improving exemption coverage, broadening its product portfolio, and opening new export markets,” she added. – Justine Irish D. Tabile, Reporter

National Economic and Development Authority Secretary Arsenio M. Balisacan is hopeful the economy grew by at least 6% in the first quarter, as rate cuts and cooling inflation drove up domestic consumption.

Mr. Balisacan told reporters it may be unrealistic to expect gross domestic product (GDP) growth to hit the upper end of the 6-8% target amid global uncertainty over the US tariff policy.

However, it may be too early to revise the growth targets, he added.

“Yeah, we are keeping for now the 6%, 6-8% growth. And we’re still quite confident that we may hit at least the low-end part (of the full-year target),” he said.

Asked if first-quarter GDP may have expanded faster than the 5.9% print in the first quarter of 2024, Mr. Balisacan replied: “If we are going to get something close to that (5.9%) for the first quarter, that to me is a respectable achievement. But I would like to see hopefully 6%.”

First-quarter GDP data will be released on May 8.

“Our target is to move the economy faster than it used to so that we can catch up with our neighbors,” Mr. Balisacan said.

Mr. Balisacan said domestic consumption, which makes up around three-quarters of GDP, will continue to drive growth.

“I would think that because of the lower interest rates and the much more favorable inflation that has happened over the last first three months of the year, this would surely have impacted favorably on domestic consumption,” he said.

In the first quarter, inflation averaged 2.2%, well within the central bank’s 2-4% target range.

The Bangko Sentral ng Pilipinas paused its easing cycle in February, but cut rates by 25 basis points at its meeting last week. This brought the target reverse repurchase rate to 5.5% from 5.75% previously.

Mr. Balisacan said second quarter economic performance may be “challenging” amid the turmoil caused by the US reciprocal tariffs.

US President Donald J. Trump on April 9 paused the new reciprocal tariffs for 90 days, although the baseline 10% tariff on almost all US imports remained in effect.

The Philippines faced a 17% reciprocal tariff, although this was the second lowest among Southeast Asian countries.

“In fact, when we did our simulation, the net benefits for us in terms of the increases in exports, overall exports, not just for the US but overall, as well as for increases in GDP, are now more favorable for us compared to the reciprocal tariffs,” he said.

Mr. Balisacan said that exports could possibly increase by 1.5% with the 10% blanket tariff during the 90-day pause.

“But then again, because exports as a contributor to our economy is quite small, the overall impact and impact is still quite high,” added.

The Development Budget Coordination Committee projects 6% and 5% growth in exports and imports, respectively, this year.

Despite the growing uncertainty in global trade, Mr. Balisacan said the Philippine economy remains relatively insulated due to its smaller role in global trade compared to its Asian neighbors.

“The economy is not as vulnerable to shocks in the global marketplace as our neighbors… because the Philippine economy’s exposure to trade is fairly small,” he said.

However, he cautioned against complacency, stressing the importance of strengthening export performance by diversifying markets and addressing investment constraints so the country could take advantage of trade diversion opportunities resulting from the sweeping US tariffs.

“We need to double, even triple, our efforts to improve the investment environment so investors see the Philippines as a viable destination,” Mr. Balisacan said. — Aubrey Rose A. Inosante with Reuters