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The Philippines is hoping the United States under the Trump administration will continue supporting the Luzon Economic Corridor (LEC), the Office of the Special Assistant to the President for Investment and Economic Affairs (OSAPIEA) said.

“We need to inquire from the Trump administration what their plans are for that. Although we are still very positive, we are still very hopeful,” Secretary Frederick D. Go, who heads OSAPIEA, told reporters last week.

“I think we have been a very good ally of the US, so I believe that they will reciprocate that with tangible economic benefits for our country,” he added.

The Luzon Economic Corridor is being undertaken via a trilateral commitment among the Philippines, US and Japan.

In April 2024, then-US President Joseph R. Biden, then-Japanese Prime Minister Fumio Kishida and Philippine President Ferdinand R. Marcos, Jr., launched a steering committee to drive infrastructure development in the LEC.

The initiative aims to enhance the connectivity of Luzon’s key economic areas — Subic Bay, Clark, Metro Manila and Batangas.

Mr. Go said other countries have also expressed interest in joining the initiatives for the Luzon Economic Corridor.

“While the US and Japan were leading the Luzon Economic Corridor, since that time the UK, Sweden, Korea, and Australia have all signified very serious intent,” he added.

Mr. Go also said funding for the feasibility study of one of the flagship projects of the Luzon Economic Corridor, the Subic-Clark-Manila-Batangas cargo railway, would not be affected by the US government’s pause on foreign aid funding.

After assuming office on Jan. 20, Mr. Trump ordered a 90-day pause on foreign aid to review if these programs are aligned with his “America First” policies.

However, Foundation for Economic Freedom President Calixto V. Chikiamco said the US might pull out of the Luzon Economic Corridor, which was initiated under Mr. Biden.

“It’s a Biden initiative. Most likely it will be scrapped by Trump,” he said in a Viber message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the Luzon Economic Corridor is not consistent with Mr. Trump’s protectionist policies.

“This could partly run counter to Trump’s protectionist policies that encourage American and other global businesses to invest and create more jobs in the US,” he said in a Viber message.

He said Mr. Trump has been cutting costs in the US government, which could threaten US subsidies, grants, and assistance for its closest allies.

“Trump could reverse Biden’s other programs related to this. An exemption would be on US defense cooperation and related spending, which were signaled to be not adversely affected,” he added.

The Luzon Economic Corridor is the first project of the US-initiated Partnership for Global Infrastructure and Investment in the Indo-Pacific.

It seeks to accelerate investments in high-impact infrastructure projects such as railways, ports, clean energy, semiconductor supply chains and agribusiness.

Meanwhile, Finance Secretary Ralph G. Recto said he would support the reduction of tariffs on US-made vehicles under a free trade agreement (FTA) with the US.

“We’re now working on a free trade agreement with the European Union (EU)… We’re open to a free trade agreement also with the United States. I would bat for a reduction in tariffs on US vehicles,” Mr. Recto said in a CNN interview on Tuesday.

The Philippines is in talks with the EU for a free trade deal. Philippine government officials earlier said there appears to be “renewed interest” from the US on a bilateral FTA with the Philippines.

To recall, Mr. Trump during his first term met with then-President Rodrigo R. Duterte in Manila in 2017 and released a joint statement on the FTA deal and agreed to discuss it under the US-Philippines Trade and Investment Framework Agreement.

Mr. Recto said he proposed lower tariffs on US-made vehicles “knowing that President Trump is interested in protecting and promoting US auto makers.”

Mr. Recto reiterated that he is not worried about the implication of Mr. Trump’s aggressive tariff policies considering the Philippine economy is driven mostly by domestic consumption.

The Philippines is unlike China, Vietnam and its other Southeast Asian peers, which are more export-oriented, he said. “We have a trade deficit when it comes to goods. We have a robust BPO industry and we feel that that will continue.”

“In fact, they’re more interested in investing in the Philippines’ BPO industry,” he added.

US officials are studying global reciprocal tariffs. Mr. Trump has said he wants to impose tariffs on all countries that have tariffs on US goods.

He has also said he wants to slap 25% tariffs on imports of cars, pharmaceuticals and semiconductors. — Justine Irish D. Tabile and Aubrey Rose A. Inosante

A reacceleration of inflation is still the biggest headwind to the Philippines’ economic outlook this year, which may pose a risk to the central bank’s easing cycle, a Moody’s Analytics economist said.

“The acceleration in inflation is the biggest risk for the Philippine economy and these are coming from both domestic and external factors,” Moody’s Analytics economist Sarah Tan said in an interview on Money Talks with Cathy Yang on One News on Wednesday.

“Domestically, I think the risk is that food inflation remains elevated due to frequent weather disruptions that could hurt domestic supply,” she said.

In January, inflation remained steady at 2.9% although food inflation alone accelerated to 4% from 3.5% in December.

Several storms hit the country late last year, which resulted in billions of pesos worth of agricultural damage.

“Externally, I think we worry that the tariffs imposed by the US could cause global inflation to rise due to the disruptions to supply-chain networks,” Ms. Tan said.

However, she said that the impact of the US President Donald J. Trump’s restrictive trade policies on the Philippines will likely be minimal.

“If we take a step back and look at the trade relationship between the Philippines and the US, it is quite clear that the Philippines’ trade deficit with the US is rather small, especially when you compare that with other economies, be it globally or with ASEAN (Association of Southeast Asian Nations) economies.”

“That really means that the Philippines is unlikely to be high on President Trump’s list,” she added.

Since taking office in January, Mr. Trump has already slapped a 10% tariff on Chinese goods as well as duties on all steel and aluminum imports beginning March.

On the other hand, Mr. Trump’s plan to impose reciprocal tariffs on all countries that charge duties on US imports may have a more significant impact on the Philippines.

“If there’s a universal reciprocal tariff that’s going to be imposed by the US, then that will hurt the Philippines because the duties that are levied on US imports into the Philippines is higher than the other way around,” she said.

“If there is a matching of tariffs, then that will make Philippine goods to the US more costly and less competitive, which will ultimately hurt our Filipino manufacturers and exporters.”

The US is typically the top destination for Philippine-made goods. In 2024, exports to the US were valued at USD 12.12 billion or 16.6% of total export sales.

“I believe the impact on the Philippines is rather small given the low trade exposure with the US. That said, there are indirect channels of impact on the Philippines,” Ms. Tan added.

Risks to easing

Inflationary pressures from these risks could prompt the Bangko Sentral ng Pilipinas (BSP) to be more cautious about further easing, Ms. Tan said.

“If we have inflation accelerating again beyond the BSP’s target, that could delay the timing and magnitude of a potential policy easing in the Philippines,” she said.

“If that is the case, then the combination of borrowing costs and inflation staying higher for longer will be a recipe for further weakening in private consumption which is not great for the economy, given how it’s the main driver of growth.”

The BSP surprised markets after it left the benchmark unchanged at 5.75% at its Feb. 13 meeting. This after the central bank cut rates at three straight meetings since it began its easing cycle in August.

Ms. Tan was the only economist in a BusinessWorld poll of 20 analysts that correctly predicted the hold.

“It is a balancing act that the BSP has played. They have to balance both inflationary risks as well as the strength of the peso.”

“But that said, we don’t expect the pause to be felt very long. In fact, the next rate cut could come as early as in April, which is the next time the Monetary Board will meet,” she added.

Despite the pause, BSP Governor Eli M. Remolona, Jr. has said that a rate cut is still on the table at the Monetary Board’s next rate-setting meeting on April 3.

He also said the central bank is still on an easing path, signaling the possibility of up to 50 basis points (bps) worth of cuts this year.

“With inflation now largely back on target, and GDP (gross domestic product) growth still slightly below the government’s expectations, these will prompt the next rate cut sooner rather than later,” Ms. Tan added.

The Philippines’ GDP expanded by a slower-than-anticipated 5.2% in the fourth quarter. This brought full-year 2024 growth to 5.6%, short of the government’s 6-6.5% target.

Meanwhile, Ms. Tan said the upcoming midterm elections in May could provide a boost to spending.

“In general, elections, whether it’s national or midterm, they have to give a boost to the economy, especially through the consumption channel.”

“So, we will see spending on campaign-related goods and services increase. But at the same time, you know, all that increase in demand could also signal bad news for inflation,” she added. — Luisa Maria Jacinta C. Jocson

The Department of Agriculture (DA) is finalizing the minimum access volume (MAV) quota for pork imports this month amid pressure from meat importers and traders.

“The general direction for MAV will be 55,000 metric tons (MT), although not yet finalized,” Agriculture Secretary Francisco P. Tiu Laurel, Jr. said on the sidelines of an event in Valenzuela City.

Of the 55,000 MT, Mr. Laurel said 30,000 MT will be allocated for meat processors and 10,000 MT will be “equally distributed” among traders.

The DA will be given an allocation of 15,000 MT to address any potential spike in pork prices.

Under Executive Order No. 50, pork tariffs are at 15% for shipments within the MAV and 25% for those exceeding the quota.

Meat traders have been calling on the DA to issue the MAV allocation for 2025 as soon as possible to avoid supply disruptions. They claimed that the MAV quotas should have been released in the first week of January.

In a Viber message to BusinessWorld, Meat Importers and Traders Association (MITA) President Jess C. Cham said the DA is tweaking the MAV guidelines to favor processors over traders, a move that the group called a “2-class distinction.”

“It is unfair and unjust to licensees who are not processors,” he said.

“They have acquired quota legally and fairly following the MAV guidelines. Other sectors will be deprived of affordable pork and rendered uncompetitive.”

In a letter addressed to Mr. Laurel, the MITA expressed concern that the quotas for the MAV have not been distributed. The group noted that last year, the full pork quota was only released in September.

“We do not think the outcome was good for the consumers or the economy,” it said.

MITA also opposed a proposed amendment to the guidelines that only processors would be eligible to file an application either as a regular licensee or entrant.

Under the amendment, public and private entities may also qualify to secure license for the purpose of participating in the government’s food security programs.

The existing guidelines state there are only “licensees” and new entrants, and the only way to retain and acquire quota is by the licensees’ utilization or performance.

“The reemergence of ‘class distinctions’ is obviously contrary to existing guidelines and very problematic — classifying the licensees only as trader or processor,” MITA said.

“What about the producers and commercial food service providers? What are they entitled to?”

MITA noted that a two-class distinction is “very shallow and superficial.”

“After nearly three decades of MAV, the licensees have developed and established their unique characteristics. They are no longer confined to the four classes of the initial year. We now see the emergence of licensees with meat shops, meat cutting plants, cold storage facilities and logistics, serving across different trade channels and not merely confined to any solitary one,” it added.

MITA said licensees have acquired and retained quota in accordance with the guidelines.

“Hence any reallocation not in accordance with current guidelines is in fact an ‘appropriation’ and that is unfair and unjust,” it said, adding that the move will affect small processors who are unable to import and will render them uncompetitive against the larger establishments that have access to MAV.

“Some meat processors have also engaged in meat trading, while others have established meat trading companies. While MDM (mechanically deboned meat) is the major poultry item, there are ‘processors’ that currently import chicken meat that are used in food service,” MITA said.

“Will these processors be deprived of quota as well? How about rice, corn, sugar, and coffee? Or will this rule apply only to pork, making it a ‘special’ commodity?”

MITA said taking away MAV quotas from all licensees except processors will deprive direct consumers of affordable pork and poultry meat.

“Currently MAV pork and poultry are sold in wet markets, supermarkets, meat shops, restaurants, and canteens. They can easily be sold in the Kadiwa stores too.”

National Federation of Hog Farmers, Inc. (NatFed) Vice-Chairman Alfred Ng said Mr. Laurel’s MAV pronouncement was discussed during a meeting with stakeholders on Tuesday.

“Giving more to the processors is a prudent move because they are directly involved in the manufacturing of our processed meats,” he said in a Viber message.

“Before, more was taken by the traders who enjoyed the much lower tariffs with not much risks unlike processors who have facility and machine investments,” he added.

British Chamber of Commerce of the Philippines Executive Director Chris Nelson welcomed the expected issuance of the MAV allocation.

“But what I would say is we want to see a smooth issuing. We would want that the MAV be issued as before, and that we have supply coming to the country,” he said in a Viber call.

He said the original system has benefited both the United Kingdom and the Philippines.

The Philippines is still the United Kingdom’s second-largest export market for pork.

Pork prices have surged in the country, prompting the DA to consider the imposition of a maximum suggested retail price (MSRP) for the commodity.

The DA has said the reasonable price for pork is P380 per kilo, given that the farmgate price is at P250 plus a profit margin of P100.

Mr. Laurel said the DA is eyeing to buy pork from producers and to sell the commodity directly to retailers to avoid any “layering.”

The government “will be forced to intervene” if pork prices remain high, he noted.

“I am skeptical about DA directly engaging in the sale of pork to lower prices,” Federation of Free Farmers National Director Raul Q. Montemayor said in a Viber message.

He noted DA’s role is to ensure that the market runs smoothly and is not distorted by profiteers and price manipulators.

“They have powers under the Price Act and the Anti-Economic Sabotage Law to run after these criminals,” he said. “If there is excessive layering, why not find a way to reduce these layers without having to buy and sell pork directly?” — K.A.T. Atienza