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The Philippines may face additional tariffs after US President Donald J. Trump’s fresh tariff threat against countries that impose digital taxes on US technology companies, analysts said.

In a post on Truth Social, Mr. Trump threatened countries that have digital taxes with “substantial additional tariffs” on their exports to the US if they do not remove these laws.

“With this truth, I put all countries with digital taxes, legislation, rules, or regulations, on notice that unless these discriminatory actions are removed, I, as President of the United States, will impose substantial additional tariffs on that country’s exports to the USA, and institute export restrictions on our highly protected technology and chips,” Mr. Trump said.

The Philippines, which began enforcing its digital tax law in June, may be among the countries facing additional US tariffs.

“Likely to have an impact on us since we impose 12% VAT (value-added tax) on digital services,” Ateneo Center for Economic Research and Development Director Ser Percival K. Peña-Reyes said in a Viber message.

Republic Act No. 12023 imposes a 12% VAT on nonresident digital service providers such as Netflix, Amazon, and Google. The law aims to level the playing field between local and foreign digital platforms.

“This could be part of Trump’s reciprocal tariffs on digital transactions that are taxed by different countries around the world, especially by developed countries,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“So, there is a risk of retaliatory US tariffs in the country (Philippines), though the effect could still be minimal or negligible,” he added.

Mr. Peña-Reyes warned that the US may hike the current 19% tariff on Philippine goods since Mr. Trump remains “unpredictable.”

The US began imposing a 19% tariff on Philippines goods on Aug. 7.

Mr. Ricafort said the US president could still try to get concessions in terms of reduced digital transaction taxes for US companies as part of the trade negotiations.

Mr. Trump in February signed a memorandum to combat the digital service taxes imposed by foreign governments on American companies.

The directive renewed the digital service tax investigations that were initiated during Mr. Trump’s first term while also investigating additional countries that use digital service tax.

Analysts cautioned the Philippine government against hastily lifting the VAT on US technology firms.

“(This is) something the government should study and weigh carefully — revenues lost from lifting tax versus revenues from lower exports due to higher tariff,” Mr. Peña-Reyes said.

The Department of Finance has estimated that the government will generate P102.12 billion in revenue from digital VAT collections between 2025 and 2028.

“It’s hard to be optimistic that the trade benefits we may get from lifting taxes will be greater than the impact of additional revenues we may get from taxes which, if used correctly, may help in developing industries through government support and additional incentives,” Matt Reinielle M. Erece, an economist at Oikonomia Advisory and Research, Inc., said.

Asian Consulting Group Founding Chairman and Chief Tax Advisor Raymond A. Abrea said that the Philippine law is not solely targeted at US tech giants, “but reflects a broader global move to modernize tax systems in the digital age.”

“The Philippines did not create a separate digital tax. We simply expanded VAT to include online transactions and digital service providers, ensuring fairness between traditional and digital businesses,” Mr. Abrea said in a Viber message.

Mr. Trump had claimed these digital taxes were “designed to harm, or discriminate against American technology,” while giving a pass for Chinese firms.

Meanwhile, Mr. Erece said the threat of additional tariffs poses risks to the country’s export sector and broader economic performance.

“Therefore, the country must do two things: continue close but persistent trade negotiations with the US but also be aggressive in supporting and incentivizing exporting industries to develop competitive goods that remain attractive to foreign consumers despite tariffs being in place,” he said.

Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said that businesses are in a wait-and-see stance until the new tariffs are clarified.

“We are taxing services that come from the US, like a lot of software platforms. Even if it’s on the cloud, on a prescription basis, now, there’s already a VAT,” Mr. Barcelon said in a phone interview.

“I do not know whether that translates to the fact that President Trump will impose their version of a tax on our exports. But it sounds like that will be the effect,” he added.

Meanwhile, the 19% US tariff is expected to have a smaller impact on the Philippine economy than previously expected, Fitch Solutions’ unit BMI said.

“We estimate that the revised tariff rate will lead to a 0.4-percentage-point (ppt) reduction in output over the medium term, a significant improvement from the 1.4-ppt decline we estimated in April,” BMI said in a report.

BMI said it maintained its full-year gross domestic product (GDP) growth forecast for the Philippines at 5.4% as it expects global economic conditions to deteriorate in the second half when US tariffs take effect.

BMI’s forecast is below the government’s 5.5-6.5% GDP growth target for the year.

“The Philippines remains a largely domestically driven economy. While interest rates have eased considerably from their peak, erratic US trade policies will weigh on global investor sentiment and limit foreign direct investment inflows,” BMI said.

“As such, we see little prospect for a meaningful investment recovery in the near term. Household consumption is showing similar weakness. Import volumes — a reliable proxy for private spending — continue to contract sharply and recent consumer surveys suggest confidence has eroded further as trade tensions escalate,” it added. — Aubrey Rose A. Inosante and Justine Irish D. Tabile, Reporters with K.K.Chan

The Bangko Sentral ng Pilipinas (BSP) is widely expected to cut rates for a third straight meeting on Thursday amid a continued downtrend in inflation and a slowdown in economic growth, analysts said.

A BusinessWorld poll conducted last week showed that all 20 analysts surveyed expect the Monetary Board to cut the target reverse repurchase rate by 25 basis points (bps) at its policy meeting on Aug. 28.

If realized, this would bring the benchmark rate to 5% from the current 5.25%.

The central bank has so far lowered borrowing costs by a total of 125 bps since it began its easing cycle in August last year. It delivered two 25-bp cuts at each of its meetings in May and June.

“Inflation is currently trailing well below the BSP’s 2-4% target band, easing to as low as 0.9% year on year in July. Given the performance of inflation so far, the BSP, we believe, has the runway to quicken and, most especially, deepen its easing cycle,” HSBC economist for ASEAN (Association of Southeast Asian Nations) Aris D. Dacanay said.

Inflation fell to 0.9% in July, the lowest in nearly six years, or since the 0.6% print posted in October 2019. It also marked the fifth straight month that inflation settled below the central bank’s 2-4% target range.

“The primary catalyst for this expected policy shift stems from subdued inflationary pressures,” Maybank Economist Azril Rosli said. “We believe this persistent undershooting of the inflation target provides the BSP some room of policy space to support economic growth without compromising price stability,” he added.

For the first seven months of the year, inflation averaged 1.7%, a tad higher than the BSP’s 1.6% full-year forecast.

“Softer price growth has provided relief to both consumers and businesses, who had contended with elevated inflation from 2022 through mid-2024,” Moody’s Analytics economist Sarah Tan said in an e-mail.

Deutsche Bank Research said inflation is likely to stay below the BSP’s 2-4% target until early 2026.

“President Marcos’ order to suspend rice imports in September to October this year could add some upsides to inflation, but it is unlikely to cause overshoots in inflation for a sustained period, barring any extensions to the suspension or increases in tariffs on rice imports,” it said.

Earlier this month, President Ferdinand R. Marcos, Jr. ordered a halt on rice imports for 60 days starting Sept. 1 to provide relief for farmers.

“While CPI (consumer price index) readings should accelerate from here, contained domestic rice prices and a reversal in oil should keep inflation subdued,” ING Bank said in a report.

Slowing growth

Slowing economic growth may also be a factor in the Monetary Board’s decision to continue its easing cycle, analysts said.

“Economic growth is still struggling to regain positive momentum, as we’ve all seen in this month’s Q2 GDP (gross domestic product) release and inflation remains comfortably below the BSP’s target range, a situation that we think will persist until the end of 2025, providing the Board with ample room for more easing,” Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said in an e-mail.

In the April-to-June period, GDP expanded by an annual 5.5%, picking up from 5.4% in the first quarter but slower than the 6.5% growth in the second quarter of 2024.

Security Bank Chief Economist Angelo B. Taningco said the Monetary Board will likely look at the “need to accelerate GDP growth,” after first half growth was below the government’s target for the year.

For the first half, the Philippines’ GDP growth averaged 5.4%, slower than the 6.2% a year ago. This was slightly below the government’s 5.5% to 6.5% growth target range for this year.

Matt Reinielle M. Erece, an economist at Oikonomia Advisory and Research, Inc., said in a Viber message that “underwhelming” economic growth and below-target inflation will prompt the BSP to continue easing to boost consumer spending and business expansion.

“A more accommodative financial environment therefore is seen to help stimulate consumption and investments especially, as expensive imports and weaker export demand are expected to exert some downward pressure on growth,” Marian Monette Q. Florendo, a research and business analytics officer at Metrobank, said.

Challenging headwinds created by the US tariff rates are also expected to weigh on Philippine growth momentum.

“With the economy still contending with external risks such as higher US tariffs and global policy uncertainties, the BSP may consider a more accommodative policy stance to lend more support to the economy and help meet the government’s growth targets,” Chinabank Research said.

Earlier this month, the US began imposing a 19% tariff on Philippine goods.

“Lower policy rates will help support investment and credit amid the incoming slowdown in global trade. So far, credit, investment, and consumption, though improving, are not growing as fast as it used to be prior to the pandemic,” Mr. Dacanay said.

Chinabank Research said the central bank may also consider the Federal Reserve’s policy direction.

“The BSP will likely take into account the developments in the Fed’s monetary policy, given its influence on the USD-PHP exchange rate and its potential subsequent impact on domestic inflation,” it said.

Last week, Federal Reserve Chair Jerome H. Powell signaled a possible rate cut at the US central bank’s meeting next month amid persistent inflation and employment woes.

Mr. Dacanay said that a 25-bp cut would mean narrowing the spread between the BSP rate and the upper bound of the Federal Funds Rate.

“If the BSP does loosen the monetary reins (this) week, the spread between the BSP rate and the upper-bound rate of the Fed rate would narrow to as low as 50 bps,” he said. “That would be the narrowest policy rate differential seen since the BSP shifted to an inflation targeting framework back in 2002.”

The upper bound of the Federal Funds Rate target range currently stands at 4.5%. This rate, set by the Federal Open Market Committee, is the interest rate that commercial banks use when lending excess reserves to each other.

Ms. Florendo said the current peso level provides the central bank with leeway to narrow the differential.

“Current USD/PHP level, which remains within the P56-to-P57 level, signals that peso has space to absorb a narrower IRD (interest rate differential). Moreover, a weak dollar environment is expected to partially offset its impact,” Ms. Florendo said.

Further cuts

Analysts said they expect the BSP to continue easing in the fourth quarter. After the Aug. 28 review, the Monetary Board is scheduled to meet again on Oct. 9 and Dec. 11.

Union Bank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said he expects the next rate cut to occur as early as Oct. 9, “assuming inflation remains subdued, and growth continues to underperform.”

Mr. Dacanay said he sees the BSP lowering the benchmark rate by another 25 bps to 4.75% in the fourth quarter, and another 25 bps to 4.5% in the first quarter of 2026 “subject to rice inflation being manageable.”

Metrobank Chief Economist Nicholas Antonio T. Mapa said the BSP will remain data dependent but could cut rates again in December.

Bank of the Philippine Islands Chief Economist Emilio S. Neri, Jr. said the BSP “seems determined” to cut again in the fourth quarter and “some more in 2026.”

“We think the outlook remains too uncertain that they may end up taking back some of those cuts next year or in 2027,” he said.

Philippine National Bank economist Alvin Joseph A. Arogo said it is “more prudent” for the BSP to pause in October and December due to upward risks to 2026 inflation and uncertainty over the Fed’s rate cuts.

University of Asia and the Pacific economist Victor A. Abola said the central bank should be as aggressive in lowering rates as they were with the hikes in 2022.

“Be more consistent and do at least 50 bps now and another 25 bps after a month. The economy needs to rebound from the extraordinarily high nominal and real interest rates,” Mr. Abola said. — Katherine K. Chan

The Department of Finance (DoF) is eyeing to raise PHP 193.65 billion from the privatization of big-ticket government assets, including the Financial Center Area in Pasay City and Food Terminal, Inc. (FTI) property in Taguig City, by 2026.

In a document sent to BusinessWorld, the Privatization and Management Office (PMO) outlined a pipeline of 11 major assets slated for disposal this year and in 2026.

Finance Undersecretary Catherine L. Fong said the department has a “solid plan” for privatization but expects challenges in implementing it.

“The reason I’m not confident is that even if there’s a willing buyer, every sale includes so many things we need to do or fix before a sale is actually concluded and it always takes time,” she said in a Viber message on Monday.

The 2026 pipeline includes the 129,548-square-meter (sq.m.) Financial Center Area in Pasay City which has an estimated value of PHP 53.5 billion.

The sale of the FTI property in Taguig City is estimated to generate PHP 40.4 billion.

Also, up for sale are the Ecology Villages I, II, and III in Makati City, collectively valued at PHP 13.61 billion.

Ms. Fong earlier said the PMO is currently in the process of selling the Ecology Villages to the occupants but may take a while since they still need to determine the metes and bounds, subdivide titles and negotiate on the common areas.

The Mile Long Complex in Makati City, valued at PHP 12.26 billion, is also scheduled for privatization next year.

The sale of the 210,000-sq.m. National Housing Authority property in Tala, Caloocan is expected to generate PHP 2.74 billion.

“Currently classified as PEZA (Philippine Economic Zone Authority) area occupied by various locators and under the management of Land Bank Resources and Development Corp. (LBRDC),” it said.

The Pioneer Glass Manufacturing Corp. property in Rosario, Cavite, which covers 17 parcels of land, is expected to generate PHP 2.06 billion. The land is currently occupied by around 15 informal settler families.

The PMO also plans to sell 24 condominium units and 21 parking slots at the Atrium in Makati City, with an estimated value of PHP 449.6 million.

The list also includes the Caliraya-Botocan-Kalayaan (CBK) hydroelectric power plants, even though the Power Sector Assets and Liabilities Management  Corp. issued a notice of award last month to the Thunder Consortium. The consortium, composed of Aboitiz Renewables, Inc., Sumitomo Corp., and Electric Power Development Co., submitted a PHP 36.27-billion bid.

The PMO clarified that the sale of the CBK power plants is “still awaiting financial close.”

Sale of shares

The government is also planning to sell its shares in several companies, including South Luzon Expressway Corp. and Semirara Mining and Power Corp. (SMPC).

According to the PMO, it plans to sell 725 million shares in South Luzon Expressway, which are valued at between PHP 12.04 billion and PHP 24.8 billion, based on a per-share value ranging from PHP 16.61 to PHP 34.21 apiece.

It also plans to sell over 145 million shares in SMPC, valued at PHP 4.73 billion or PHP 32.50 per share.

Consunji-led SMPC is the country’s largest coal producer. It supplies fuel to power plants, cement factories, and other industrial facilities across the Philippines, and exports to markets including China, South Korea, and Brunei.

The government is also looking to sell 682 million shares in United Coconut Chemicals, valued at PHP 2.82 billion or PHP 4.13 apiece. The state currently holds a 92.85% ownership stake in the company.

Asked about the exclusion of Star City amusement park in Pasay City from the list of assets to be privatized, Ms. Fong said the property is being used to back Sukuk bonds.

“We cannot sell it until the Sukuk bonds are done. Although we’re open to selling it in advance but we cannot transfer ownership until after the period of the Sukuk bonds,” she said.

The government is targeting to generate P101 billion from the privatization of assets in 2026.

For 2025, Ms. Fong said the government has collected PHP 5.53 billion in privatization revenues, exceeding its PHP 5-billion target.

Finance Secretary Ralph G. Recto earlier said no other major assets are expected to be sold this year aside from the Laguna power plant.

Ambitious goal

Analysts said the government hitting its “ambitious” privatization goal remains feasible but cautioned against relying on asset sale to address fiscal constraints.

“It is ambitious but feasible provided the government accelerates the pipeline and addresses investor concerns such as regulatory stability, asset valuation, and ease of transaction,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message.

Mr. Rivera warned that privatization should not be pursued solely to generate revenues, but to improve efficiency, reduce fiscal risks, and deliver improved public services.

“If an asset is well-managed or strategic to national interest, NG (National Government) should retain control. But if underperforming or commercially viable in private hands, privatization, done right, can help fund infrastructure, social programs, and debt reduction without raising new taxes,” Mr. Rivera added.

Jonathan L. Ravelas, a senior adviser at Reyes Tacandong & Co., said the privatization target is “ambitious but doable.”

“The CBK sale was a strong start, and the pipeline is deep,” Mr. Ravelas said in a Viber message on Monday.

He also suggested that after the CBK, the government can work on the privatization of the Agus-Pulangi hydropower complex in Mindanao. — Aubrey Rose A. Inosante, Reporter

State spending on infrastructure bounced back in June, as disbursements for public works projects resumed after the election ban was lifted in early May, the Department of Budget and Management (DBM) said.

In its latest disbursement report on Thursday, the DBM reported that expenditure on infrastructure and other capital outlays increased by 6.5% to PHP 148.8 billion in June from PHP 139.7 billion in the same month last year.

Month on month, it increased by 20.2% from PHP 123.8 billion.

This came after the month of May saw an annual 9.2% decline.

“This was largely attributed to the recovery of DPWH’s (Department of Public Works and Highways) spending performance following a two-month decline in April and May amid the election ban,” it said.

The Commission on Elections’ 45-day ban on public works spending started on March 28 and ended with the May 12 elections.

In June, the DPWH resumed payments for mobilization fees as well as made progress payments for newly awarded projects. It also settled outstanding obligations from previous years.

However, the DBM noted the pace of infrastructure spending was tempered by base effects from substantial releases for the Department of National Defense’s Revised Armed Forces of the Philippines Modernization Program in June last year.

The Philippines has been ramping up its military capacity under the USD 35-billion military modernization program since 2012 in response to rising tensions in the South China Sea.

The DBM said big-ticket releases for infrastructure are expected in the second half of the year.

Budget Secretary Amenah F. Pangandaman earlier explained that disbursements are expected to pick up toward the latter part of May to June after the 45-day election ban is lifted.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that increased infrastructure spending is crucial for economic growth.

“(This will translate to) more inclusive economic growth and development, as better infrastructure boosts the economy’s productivity, as well as help attract more foreign tourists and more foreign investments/locators,” Mr. Ricafort said in a Viber message on Thursday.

For the first half of 2025, overall infrastructure and capital outlays disbursements inched up by 1.4% to PHP 620.2 billion from P611.8 billion in the same period last year.

This was 0.1% or PHP 800 million below the PHP 621-billion program for the first semester.

“Although infrastructure expenditures posted a notable 20.8% (PHP 45-billion) annual growth in first quarter this year, it contracted by 9.3% (PHP 36.6 billion) in second quarter amid the election-related prohibition on public spending covering the entire month of April up to the first two weeks of May,” the DBM said.

Meanwhile, overall infrastructure disbursements, which include infrastructure components of subsidy or equity to government corporations and transfers to local government units, were flat at PHP 720.3 billion in the January-to-June period from PHP 720.5 billion a year ago.

It also exceeded the overall infrastructure spending program of PHP 718-billion for the first half by 0.3%.

The DBM said growth in infrastructure transfers to local government units, particularly their development fund equivalent to 20% of the National Tax Allotment, was offset by lower National Government-implemented infrastructure activities and reduced subsidies to state agencies like the National Irrigation Administration (NIA).

Subsidies provided to state-run firms stood at PHP 7.45 billion in June, 26.68% down from PHP 10.16 billion a year earlier.

Budgetary support to the NIA plunged by 68.21% in June to PHP 2.39 billion from PHP 7.52 billion in the same period in 2024.

“Nevertheless, the total infrastructure spending for the first semester was registered at 5.3% of GDP (gross domestic product), in line with the 5.3% full-year target for this year,” it added.

Based on the 2026 Budget of Expenditures and Sources, the government set its full-year infrastructure spending program at PHP 1.51 trillion, equivalent to 5.3% of the GDP.

In the following months, the DBM said line agencies are expected to ramp up requests for release of allotments for their programs, activities, and projects in the second semester as implementation activities normalize post-election ban.

“These may also include unutilized cash allocations from the second quarter that line agencies can still request this second semester so they can process payments and make disbursements to suppliers or contractors for completed and delivered goods or rendered services,” it said.

Among the anticipated spending drivers for the succeeding months are progress billings from multiple finished or partially completed road and transport infrastructure projects and releases for defense modernization program.

“Increased infrastructure spending at around 5%-6% of GDP for the coming years, as also seen in recent years, would still lead to sustained growth in infrastructure spending,” Mr. Ricafort said. — Aubrey Rose A. Inosante