Archives: Business World Article

A House of Representatives committee on Monday moved to channel billions worth of flood control funds to education and health as they began revising the proposed PHP 6.793-trillion national budget for 2026.

The House sub-committee on Budget Amendments Review redirected PHP 255 billion in flood control funding originally allocated for the Public Works department next year towards the Health and Education departments, in line with President Ferdinand R. Marcos, Jr.’s call to strengthen human capital development.

“We want to ensure that we are able to reallocate it in a way that the budget will be most responsive to the needs of the Filipino people,” said Nueva Ecija Rep. Mikaela Angela B. Suansing, who chairs the House Appropriations Committee.

The reallocation follows allegations of irregularities in flood control projects, including substandard, incomplete or nonexistent infrastructure, in a country prone to flooding.

The House sub-committee overseeing fund rechanneling is part of a broader push to improve transparency in budget deliberations, replacing the previously opaque “small committee” that handled revisions to the national spending bill.

The House will begin plenary deliberations on the proposed national spending plan today (Sept. 23), Ms. Suansing said, over a month after the Budget department submitted the National Expenditure Program to Congress.

Ms. Suansing said deliberation on the budget will continue until the House passes the budget bill on second reading before the end of September.

Congressmen raised the Department of Education’s (DepEd) proposed budget by 2.8% or PHP 26.54 billion to PHP 955.04 billion for 2026.

The bulk of the proposed funding increase would go towards DepEd’s classroom construction efforts amid a shortage in government schools, more than doubling the allocation to PHP 36.5 billion from PHP 13.2 billion.

The boost in classroom construction budget could fund an additional 19,300 classrooms nationwide, helping ease classroom shortages in government schools, Party-list Rep. Brian Poe Llamanzares, vice-chairman of the House Appropriations Committee, told lawmakers.

Other programs that received additional funding include the school-based feeding program (PHP 1.5 billion), additional compensation for teachers providing tutoring (PHP 984.11 million), and teaching overload pay for teachers (PHP 579.55 million), among others.

The House sub-committee also separately added P6.61 billion for the Commission on Higher Education’s (CHED) Tertiary Education Subsidy to PHP 22.17 billion and hiked the Tulong Dunong Program budget by PHP 2.69 billion.

CHED Chairperson Shirley C. Agrupis earlier told lawmakers that about 300,000 college students could lose access to government grants if Congress does not increase the budget for the programs that cover the full or partial cost of college education for students enrolled in state colleges.

Lawmakers also increased the Department of Health’s proposed budget for next year by 3.2% to PHP 948.07 billion from PHP 918.79 billion initially earmarked under the National Expenditure Program.

Of the amount, PHP 26.73 billion would be channeled towards the government’s health financial assistance for poor patients, with PHP 2.4 billion allotted for the completion of key government hospitals nationwide.

Congressmen also tweaked the government’s subsidy for the Philippine Health Insurance Corp. (PhilHealth) to PHP 60 billion, aligning with Mr. Marcos’ directive to restore part of the PHP 89.9 billion the National Government took from the state health insurer last year.

“This is in line with the pronouncement… to return back what was taken from the budget of PhilHealth,” Surigao del Sur Rep. Romeo S. Momo, Sr., vice-chairman of the House appropriations panel, told lawmakers.

The Budget department is “working on identifying the appropriate funding source to effect the return” of the P60-billion PhilHealth funds, Budget Secretary Amenah F. Pangandaman told BusinessWorld.

“While other options — such as the use of savings, unprogrammed appropriations, or a supplemental budget — exist under current budgetary frameworks, these are subject to strict constitutional and legal requirements,” she said, noting that providing funding to PhilHealth via Congress is the “clearest and most transparent path.”

Congressmen also increased the Social Welfare department’s budget for the Assistance to Individuals in Crisis Situations (AICS) program by PHP 32 billion to PHP 59.04 billion. AICS provides financial assistance to individuals in crisis, including medical, burial, transportation, and educational assistance.

They also hiked the Department of Agriculture’s budget by PHP 41.08 billion to PHP 176.01 billion.

About PHP 8.98 billion would be redirected towards the construction of additional farm-to-market roads, with PHP 9.21 billion going towards the construction of post-harvest facilities and rehabilitation of existing structures, among others, a presentation by the House Appropriations Committee showed.

The House sub-committee also channeled about PHP 1 billion to the Transportation department for its Metro Rail Transit Line 3 rehabilitation project, and an additional PHP 266 million for its operations.

Lawmakers also added an additional PHP 900.56 million for the acquisition of 40 fast patrol ships for the Philippine Coast Guard (PCG), and PHP 656.86 million to acquire a “dark vessel” detection system for ships operating in Philippine waters.

The PCG has been at the forefront of Manila’s efforts to assert its territorial claims in the South China Sea, where China’s expansive nine-dash line overlaps with the exclusive economic zones of the Philippines, Vietnam and Malaysia.

Congressmen also agreed to provide the Defense department with an additional PHP 556.86 million for the development of a forward operating base in Palawan province, which faces the disputed waterway. Another PHP 300 million was earmarked for the acquisition of land lots for the construction of an air force base in Laoag, Ilocos province.

The decision to reallocate flood control funds toward human capital development is a step in the right direction for the government, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

“Lawmakers must ensure that these funds go beyond recurring costs and are directed toward systemic improvements such as teacher training, health infrastructure, digital access and nutrition,” he said in a Viber message.

Congress should also consider revisiting the broader proposed national budget rather than focusing solely on the PHP 255-billion flood control funds, Mr. Rivera said.

“Without it, this reallocation may just be a temporary fix rather than a transformative pivot,” he said.

“The issue is that we should place our funds in investments with higher gains,” Leonardo A, Lanzona, an economics professor at the Ateneo de Manila University, said in a Facebook Messenger chat. “We should target these funds to the poor since these are the households that need the resources the most and hence produce the greatest gains.” —Kenneth Christiane L. Basilio, Reporter, with inputs from Aubrey Rose A. Inosante

The Philippines is projected to be the third-most affected economy in Southeast Asia by US tariffs, as its exports to the US are expected to contract by 13%, a United Nations Development Programme (UNDP) report showed.

In its report “Disruption, Diversification, and Divergence” released on Sept. 18, the UNDP said the Philippine exports to the US could potentially drop by 13.1%, due to the newly imposed tariffs.

“The imposition of steep US tariffs is projected to trigger a significant demand-side shock, particularly for Asia-Pacific economies with high trade exposure,” it said.

“The Asia-Pacific region as a whole faces a 6.4% decline in total exports to the US due to tariff-induced price increases, with Southeast Asia hit the hardest at 9.7%,” it added.

In Southeast Asia, Cambodia is the most vulnerable to the US tariffs, with an expected 23.9% drop in total exports to the US.

Vietnam is the second-most affected by tariffs, with a likely 19.2% decline in total exports.

Other Southeast Asian economies are also expected to see a decline in exports to the US, with Thailand’s exports likely to fall by 12.7%, followed by Malaysia (10.4%), Indonesia (6.4%), and Singapore (3.8%).

These estimates are based on US tariff rates as of July 31.

In an executive order signed on July 31, US President Donald J. Trump imposed a 19% duty on many goods from five members of the Association of Southeast Asian Nations (ASEAN) — the Philippines, Cambodia, Malaysia, Thailand and Indonesia. These rates took effect on Aug. 7.

The US is the Philippines’ top export destination, receiving $12.14 billion in shipments last year.

The UNDP said that small, highly trade-dependent economies that focus on lower-value products are the most exposed to tariff shocks.

“Their reliance on narrow export baskets and limited markets leaves them without meaningful buffers against external volatility. In such settings, tariff increases are transmitted directly into export losses, foreign exchange constraints, and employment pressures, with limited scope for policy mitigation given constrained fiscal space and less flexible labor markets,” it said.

Meanwhile, larger economies that concentrate on higher-value products are more likely to absorb the impact of tariff shocks, UNDP said.

According to the UNDP, the Philippines had one of the highest shares of exempted goods relative to its total exports to the US at 27%.

This was behind Malaysia (39%) and Vietnam (28%), but ahead of Thailand (26%), and China (24%).

US TARIFF RULING

Meanwhile, the Philippine government is still waiting for the final decision of the US Supreme Court on the legality of Mr. Trump’s global tariffs.

“We still have to wait for the final decision of the Supreme Court on this,” Special Assistant to the President for Investment and Economic Affairs Undersecretary Ma. Angela E. Ignacio said during the Philippine Economic Briefing in Clark.

Reuters reported the US Supreme Court has scheduled arguments that will hear the legality of the Trump tariffs on Nov. 5.

The High Court is taking up the case after a lower court ruled that Mr. Trump had overstepped his authority in imposing most of his tariffs under the 1977 law known as the International Emergency Economic Powers Act. The tariffs are still in effect during the appeal to the SC.

Ms. Ignacio said the Philippine government is still looking to secure an “optimal and mutually beneficial agreement” with the US, which has previously expressed interest in securing tariff exemptions for selected US imports and a free-trade agreement.

Ms. Ignacio also said the country is looking at alternative export markets such as the European Union, the Middle East and Australia. — ARAI

The Philippines’ balance of payments (BoP) surplus ballooned to USD 359 million in August, reflecting gains in the central bank’s net income from overseas investments, the Bangko Sentral ng Pilipinas (BSP) said.

Preliminary data from the BSP showed the BoP surplus stood at USD 359 million in August, widening from USD 88 million in the same month last year.

Month on month, the BoP position swung to a surplus from the USD 167-million deficit recorded in July.

“The BoP surplus reflected the Bangko Sentral ng Pilipinas’ net income from its investments abroad,” the central bank said in a statement.

BoP refers to the country’s economic transactions with other nations. A surplus indicates more funds entered the country, while a deficit shows that the country spent more than it received.

In the January-to-August period, the country’s BoP position swung to a USD 5.397-billion deficit, a reversal from the USD 1.592-billion surplus in 2024.

“Preliminary data indicate that the year-to-date BoP deficit was largely due to the continued trade in goods deficit,” the BSP said.

The Philippines’ trade-in-goods balance, or the difference between the values of exports and imports, narrowed to USD 28.46 billion in the January-to-July period, from USD 29.93 billion a year ago.

“This was partly offset by the sustained net inflows from personal remittances from overseas Filipinos, foreign borrowings by the National Government, foreign direct and portfolio investments, and trade in services,” the BSP said.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said in an e-mail that the latest BoP position partly reflects the central bank’s investment gains from abroad.

“(This was) offset by the continued Trump risk factor or premium that led to some market volatility worldwide in view of the Aug. 7, 2025 extended deadline for US trade deals and tariffs,” he added.

US President Donald J. Trump’s higher tariffs on imports from dozens of countries, including the Philippines, took effect on Aug. 7.

The US imposed a 19% tariff on Philippines goods.

Mr. Ricafort said the August BoP position also came as the government paid off external debts and increased volatility in the local foreign exchange market.

In August, the peso performed weaker at an average P57.2525 per US dollar from the P56.7523 recorded in July.

The BSP expects the overall BoP position to end at a USD 6.3-billion deficit or -1.3% of gross domestic product (GDP) this year and a USD 2.8-billion deficit or -0.5% of GDP in 2026.

DOLLAR RESERVES

Meanwhile, the BSP said the BoP position mirrored the rise in gross international reserves (GIR) to USD 107.1 billion as of end-August from USD 105.4 billion as of end-July.

“The latest GIR level ensures availability of foreign exchange to meet balance of payments financing needs, such as for payment of imports and debt service, in extreme conditions when there are no export earnings or foreign loans,” the BSP said.

The central bank said the level of dollar reserves as of end-August “remains an adequate liquidity buffer,” equivalent to 7.2 months’ worth of imports of goods and payments of services and primary income, more than double the three-month standard.

It is also enough to cover about 3.7 times the country’s short-term external debt based on residual maturity.

GIR comprises foreign-denominated securities, foreign exchange, and other assets such as gold. It enables a country to finance imports and foreign debts, maintain the stability of its currency, and safeguard itself against global economic disruptions.

The central bank expects GIR to settle at USD 104 billion by end-2025 and USD 105 billion in 2026. — Katherine K. Chan

 

The Bangko Sentral ng Pilipinas (BSP) is implementing a new cash withdrawal limit of PHP 500,000 per day in a move to curb money laundering risks involving large cash transactions.

BSP Governor Eli Remolona Jr. issued on Thursday Circular No. 1218 directing all supervised financial institutions (BSFI) to implement “enhanced due diligence (EDD) on large value cash-related payments and transactions.”

Under the circular, a maximum of P500,000 or its equivalent in foreign currency may be withdrawn at once or via multiple transactions within one banking day.

The BSP said withdrawals exceeding the threshold shall only be processed via check payment, fund transfer, direct credit to deposit accounts, or BSFI’s digital payment platforms.

“The BSP in its latest sectoral risk assessment and surveillance monitoring has noted money laundering, terrorism financing, and proliferation financing risks arising from cash transactions of banks and other BSP-supervised financial institutions,” the circular read. “These disclosed the use and abuse of cash-based transactions to move illicit funds into and out of the financial system.”

The BSP issued the circular amid an ongoing investigation into allegedly anomalous flood control projects involving government employees, contractors, and other individuals.

“Through this reform, the BSP aims to strengthen measures against the use of cash for illegal activities, promote trust in the financial system, and ensure that it can respond to new risks,” the central bank said.

However, the central bank noted that BSFIs may still allow withdrawals beyond the P500,000 limit if the client provides evidence of a legitimate business purpose. Such transactions may be approved after the BSFI conducts enhanced due diligence and files a suspicious transaction report (STR).

“If the BSFI fails to satisfactorily complete the EDD procedures, or reasonably believes that performing the EDD process will tip-off the customer, it shall file a suspicious transaction report and closely monitor the account and review the business relationship,” the circular reads.

“The BSFl shall also consider the alerts, red flags. and suspicious indicators, as well as typologies rioted/reported by relevant government agencies, involving large or unusual cash transactions in filing STR,” it added.

The circular will take effect in 15 calendar days following the publication in the Official Gazette or in a newspaper of general circulation.

On Wednesday, the Court of Appeals froze assets pointing to a potential money laundering scheme of 26 Department of Public Works and Highways (DPWH) officials and private contractors allegedly linked to anomalous government flood control projects. — Katherine K. Chan

The Bangko Sentral ng Pilipinas now has more room to continue its policy easing to support economic growth after the US Federal Reserve delivered a much-awaited cut on Wednesday but may stay cautious amid lingering inflation risks.

“The Fed decision is but one additional factor for BSP’s policy calculus… Last night’s decision and potential subsequent easing would afford BSP more space to cut rates further should growth remain in need of support,” Metropolitan Bank & Trust Co. (Metrobank) Chief Economist Nicholas Antonio T. Mapa said in a Viber message.

Speaking at the Philippine Economic Briefing in Cebu held on Thursday, BSP Deputy Governor Zeno R. Abenoja said the central bank will continue to monitor both inflation and growth.

“This year, we think inflation will average below the target. The target is 2% up to 4%. We may be averaging at around 1.7%… But for the next two years, 2026, 2027, inflation will be back in the middle of the target, around 3.3% to 3.4%, and because of that, we may be near the appropriate interest rates for policy. So, we are moving towards that, what we call the ‘sweet spot’ where interest rates are at the right level to promote growth but at the same time control inflation,” he said.

“What are we looking at? We are looking at future inflation or underlying inflation pressures. We are looking at growth numbers. If growth numbers continue to be resilient, we don’t have to do big adjustments, but we will continue to do baby steps. We are looking at inflation expectations… So, for the rest of the year, we still have two policy meetings. It is possible that there could be some policy actions, but we will take it one meeting at a time.”

Last month, the BSP lowered borrowing costs by 25 basis points (bps) for a third straight meeting to bring the policy rate to 5%. It has now reduced benchmark interest rates by a cumulative 150 bps since it began its rate cut cycle in August 2024.

BSP Governor Eli M. Remolona, Jr. has left the door open to one more reduction within this year to support the economy if needed, which would likely mark the end of its easing cycle.

He also said that they see “more significant risks to the inflation outlook than the output outlook,” even as they expect prices to be manageable.

The Monetary Board’s last two meetings this year are scheduled for Oct. 9 and Dec. 11.

Meanwhile, at Wednesday’s meeting, the Fed lowered its policy rate by 25 bps to a range of 4%-4.25%, its first cut since December, and signaled a gradual easing cycle in response to mounting labor market concerns, Reuters reported. This brought its cumulative cuts since September 2024 to 125 bps.

At the same time, Fed Chair Jerome H. Powell highlighted “a challenging situation” for policymakers, noting that risks to inflation were tilted to the upside and risks to employment to the downside.

The comments dampened market optimism despite a much hoped-for dovish shift after recent data that showed unemployment climbing to 4.3% in August and payrolls growing far less than expected. A steep downward revision to benchmark jobs figures for the year through March also recently added weight to the view that the labor market is losing steam, bolstering the case for multiple rate cuts ahead.

The US central bank’s release on Wednesday of updated quarterly economic projections, including rate forecasts issued in a chart known as the “dot plot,” reflected expectations of more easing this year when compared to the “dots” from the June meeting, with 50 bps in cuts seen before yearend.

At the same time, the Fed’s projections still put inflation ending this year at 3%, well above the central bank’s 2% target, while its projection for economic growth was slightly higher at 1.6% versus 1.4%.

Peso suport

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the BSP could match the Fed’s future cuts to maintain a “healthy” rate differential, but only if the data show a weakening economy and manageable inflation. The US central bank’s latest move put the difference between its target rate and the BSP’s to 75 bps.

Mr. Remolona has said that the rate differential’s potential impact on the peso does not worry them as much anymore as the local unit has performed well against the dollar, even as this margin has been below 100 bps for some time.

Metrobank’s Mr. Mapa said a wider spread between the BSP and the Fed’s key rates could attract foreign inflows, which would prop up the peso against the dollar and help limit imported inflation.

“The Fed’s easing gives BSP more room to cut without risking sharp peso depreciation… If BSP cuts again while the Fed continues easing, the differential will likely remain within a safe range, especially if both move in tandem. However, if BSP moves faster than the Fed, peso depreciation risks could rise. This is why the BSP is careful with its succeeding steps and continues to stress their data dependency,” Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines, said in a Viber message.

He said that the peso could weaken if the BSP eases “too aggressively,” which could then cause import costs to go up and stoke prices.

“Secondly, while inflation is currently below target, risks remain from typhoon-related supply shocks, higher rice tariffs, and energy prices. The BSP must avoid over-easing if these materialize,” Mr. Asuncion said.

“Lastly, US trade policy uncertainty and geopolitical tensions could affect global capital flows. A sudden reversal in Fed policy or a spike in US inflation could force BSP to pause or even reverse easing.”

Philippine National Bank economist Alvin Joseph A. Arogo said in an e-mail that they do not expect the BSP to move in lockstep with the Fed, but a wider gap between rates could provide a “margin of safety” for the peso.

The BSP is more focused on domestic economic indicators, particularly inflation and GDP (gross domestic product) growth, when calibrating its monetary policy,” he said.

On Thursday, the peso closed at PHP 57.06 per dollar, weakening by 17 centavos from its PHP 56.89 finish on Wednesday.

Year to date, the local unit is up by 78.5 centavos from its PHP 57.845 close on Dec. 27, 2024.

“At this point, it appears the BSP won’t move as fast or as deep as the Fed in cutting rates, so a widening policy rate differential between the US and the Philippines will further strengthen the peso. It is also worth noting that a wide policy rate differential gives the BSP significant scope for lowering rates to boost the economy while ensuring the peso’s stability,” China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message.

Prospects of more BSP and Fed rate cuts will be positive for domestic bond yields and the stock market, he said, adding these could push the Philippine Stock Exchange index (PSEi) to the 6,500-6,600 levels in the coming months.

The PSEi went up by 22.96 points or 0.37% to close at 6,233.62 on Thursday.

“We expect a downward bias for yields, with any upward correction to be limited as investors would prefer locking in yields at this point,” a bond trader added.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message that the US central bank’s decision had no immediate impact on Philippine markets as the cut has already been priced in by investors.

“Moving forward, more economic data such as CPI (consumer price index) and employment data, may impact the timing of the Fed and BSP cuts,” he said. — Katherine K. Chan with a report from Aaron Michael C. Sy

The Seasonal increase in household spending amid the upcoming holiday season could help propel Philippine economic growth to reach the government’s target, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said.

Mr. Balisacan said faster growth in household final consumption, which accounts for over 70% of gross domestic product (GDP), can push economic growth to meet the 5.5% to 6.5% goal for this year.

“Household consumption should be enough because the inflation has continued to be low,” he told reporters on the sidelines of an event on Thursday.

“Interest rates are also (low), and there are lagged effects from previous interest rate (cuts). I think in general, confidence is still there for consumers and businesses.”

Mr. Balisacan said the economy must grow by 5.6% in the second half to meet the low end of the full-year target and by 7.5% to hit the upper end.

DEPDev Undersecretary Rosemarie G. Edillon also told BusinessWorld on the sidelines of a House briefing on Wednesday that the holiday-driven boost in private spending could bring GDP growth to the lower end or middle of the 5.5% to 6.5% target.

Philippine GDP grew by 5.5% in the second quarter, supported by a rebound in agriculture production and faster household spending. Household final consumption expenditure jumped by 5.5% during the period.

Economic growth averaged 5.4% in the first semester, just a tad below the 2025 goal.

Meanwhile, headline inflation averaged 1.7% in the first eight months of the year, below the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target.

Manageable inflation has allowed the BSP to continue its easing cycle, with cumulative cuts since August 2024 now at 150 basis points (bps) following its latest 25-bp reduction delivered last month.

BSP Governor Eli M. Remolona, Jr. has signaled that they are nearing the end of their rate cut cycle and could lower borrowing costs one last time this year if inflation remains low to provide support to the economy.

Mr. Balisacan flagged potential risks to economic growth, including delays in the rollout of infrastructure projects due to the ongoing probe into alleged irregularities in government flood-control contracts.

“That’s what we’re hoping — to still reach the lower end. But of course, there could be surprises, like this issue of flood control. Hopefully, that will not slow down the implementation of legitimate projects,” he said.

Budget Secretary Amenah F. Pangandaman has said that infrastructure spending, a key growth driver, is unlikely to be affected by the probe.

Foundation for Economic Freedom President Calixto V. Chikiamco said slowing inflation may provide a “marginal boost” to consumer spending, but weak global trade due to the tariffs imposed by the United States could affect supply-side drivers like exports.

He added that real interest rates are still high despite the BSP’s easing moves.

Moody’s Analytics also said in a report on Thursday that the Asia-Pacific region is expected to “feel the sting from tariffs more than others” as most countries are backed by export-led growth. “With business and consumer spending across the region tepid, there is little homemade demand to fall back on.”

“While increased consumption can help fuel GDP growth, it cannot stand alone as it must be matched by a corresponding boost in productive investments, which in turn depends on restoring investor confidence through good governance,” said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies. “In an environment of low public trust due to corruption, achieving the upper bound of GDP growth targets will require going beyond the usual growth drivers and addressing credibility, transparency, and accountability head on.”

“Holiday spending will give GDP a lift, no doubt. But to hit the 6%, we’ll need more than Christmas cheer. We need stronger job creation, better remittance flows, and a rebound in exports. Consumption helps, but it’s not a solo act,” Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said in a Viber message. — Aubrey Rose A. Inosante, Reporter

Some exporters have seen slower orders from the United States after the 19% “reciprocal” tariff took effect last month, which could cause outbound shipments this year to be lower than previously expected, the Philippine Exporters Confederation, Inc. (Philexport) said.

Philexport President Sergio R. Ortiz-Luis, Jr. said export sales may only reach between USD 105 billion and USD 110 billion for this year amid the slowdown in orders from the US.

This is below the USD 115.49-billion export target under the updated Philippine Development Plan (PDP) and significantly lower than the USD 163.6-billion projection under the Philippine Export Development Plan (PEDP).

“Humina talaga ang orders. Noong April nag-canvass kami (Orders have really slowed down. When we asked them in April), 90% of the exporters to the US that we canvassed said that it is business as usual,” he told reporters on the sidelines of the group’s general membership meeting on Thursday. “The other 10% said that they are having problems with their buyers because they are very cautious. Noong lumabas [’yong tariffs] noong August, lalo nang nawala ’yong buyers sa US (This worsened when the tariffs were implemented in August).”

“The PEDP is unworkable already, so we are just adopting the PDP because it is more attainable. But with [US President Donald J.] Trump coming in, we might also not reach it. Our target now is USD 110 billion. So, I hope our exports will be between USD 105 billion and USD 110 billion,” Mr. Ortiz-Luis added.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the Philexport’s year-end forecast is a more realistic range.

“While electronics remain a bright spot, external headwinds — such as slower US demand and tariff risks — pose challenges,” he said in a Viber message.

“Our trade outlook sees the deficit narrowing gradually, but export diversification and value-added growth will be key to sustaining momentum.”

The Philippines’ trade deficit narrowed to USD 28.46 billion in the first seven months from the USD 29.93-billion gap a year ago.

The country’s trade balance has been in deficit for over a decade or since the USD 64.95-million surplus recorded in May 2015.

In the January-to-July period, exports increased by 13.9% to USD 48.62 billion, while imports rose by 6.1% to USD 77.09 billion.

The Development Budget Coordination Committee projects a 2% contraction and 3.5% growth in exports and imports, respectively, this year.

Mr. Ortiz-Luis said frontloading was the main driver of the country’s merchandise exports for the first seven months of the year.

“That is when we still had a tariff advantage… But when the new rate came out, everybody’s tariff went down except us and Brunei,” he said.

“Our competitiveness disappeared immediately… Unless something positive comes, our exports to the US will slow down.”

Amid lingering uncertainty in the global trade environment, exporters need to look for alternative markets, which Philippine companies cannot do “as we don’t have funds, postings, and research and development,” he said.

“So far, [the government’s support for] exports has only been lip service.”

Most exporters, especially smaller companies, cannot promote overseas through trade fairs because they lack funding, Mr. Ortiz-Luis said.

The outlook for semiconductor exports also remains uncertain as Mr. Trump has threatened to impose a 100% tariff on chips entering the US, he added.

“The tariff for electronics, until now, we don’t know. Because if the US puts all of it at 100% and then South Korea, Japan, and Taiwan have special rates, our electronics will be dead, and they will have no choice but to leave.”

“In the meantime, we do not know. We are still uncertain about it. Everybody is just interpreting what Trump is saying,” he said, adding they still expect the country’s chip exports to grow by 1-2% this year.

In the first seven months, the country’s electronic exports reached USD 25.61 billion, up 7.2% from USD 23.88 billion in the same period last year. — Justine Irish D. Tabile, Reporter