PHILIPPINE economic growth is expected to slow to 5% this year due to the fallout from the Trump administration’s trade policy and weak private spending, ANZ Research said.
In its latest Asia Insight report, ANZ cut its gross domestic product (GDP) forecast for the Philippines to 5% this year from 5.7% previously. It also lowered its 2026 GDP projection to 5.5% from 6% previously.
Both forecasts would fall short of the 6-8% growth target set by the Development Budget Coordination Committee from this year to the next.
“Our new forecasts incorporate our expectations of direct and indirect impact of tariffs, bilateral trade agreements between the US and individual economies, revised growth estimates for mainland China and the US and potential policy response,” ANZ Chief Economist for Southeast Asia and India Sanjay Mathur said.
The downward revisions constitute a “durable shock to regional growth as US tariffs imply a long-term reduction in global trade,” he added.
President Donald J. Trump slapped reciprocal tariffs on most of its trading partners earlier this month but suspended these higher tariffs for 90 days. Only the baseline 10% tariff remains in effect.
The Philippines was hit with a 17% reciprocal tariff, though this was the second lowest in Southeast Asia, just after Singapore.
“It is likely that some Asian economies will negotiate down or even do away with the April 2 reciprocal tariffs owing to the potential damage to US growth,” Mr. Mathur said. “Even so, the uncertainty around US trade policies will constrain business activity, including hiring and investment.”
ANZ slashed its growth projection for Asia, excluding China and India, to 2.9% this year from 3.4% previously. It also trimmed its 2026 forecast to 3.3% from 3.5% previously.
ANZ also downgraded its GDP projections for all countries it covers, namely India, Indonesia, Malaysia, Singapore, Taiwan, Thailand, South Korea and Vietnam.
Among these economies, Singapore and Vietnam are seen to be the most impacted by the tariff turmoil. Malaysia, South Korea, Thailand and Taiwan were also noted to have “significant exposure to global trade.”
On the other hand, ANZ said the Philippines is less exposed to global trade, along with India and Indonesia.
“The reduction in India and Indonesia’s growth is moderate. It is comparatively higher for the Philippines owing to the lack of any improvement in private capital spending and the fact that a little over 41% of inward remittances are from the US,” Mr. Mathur said.
However, the three countries are “vulnerable to slower growth in the US,” he added.
Last year, the US was the top destination for Philippine exports, accounting for 17% of the total.
“Separately, it is unlikely that Asian exporters can substantially frontload exports during the 90-day pause on reciprocal tariffs. US imports had already run up substantially ahead of the April 2 tariff announcements corroborating with a rise in inventories.”
“We also think that an indiscriminate rise in exports to the US will weaken bilateral trade negotiations,” he added.
Meanwhile, ANZ also lowered its headline inflation forecasts for the Philippines.
It now expects inflation to settle at 2.9% this year, lower than its previous projection of 3.4%. For 2026, inflation is expected to average 3.2%, slightly lower than its previous forecast of 3.5%
“Our revised forecasts also reflect lower inflation in most economies. This reflects intertwined developments including slowing growth that corresponds to negative output gaps, lower commodity prices, particularly crude oil, and the potential rise in imports from mainland China,” Mr. Mathur said.
Headline inflation averaged 2.2% in the first quarter, well within the central bank’s 2-4% target range.
Accounting for risks, the Bangko Sentral ng Pilipinas (BSP) sees inflation averaging 2.3% in 2025 and 3.3% in 2026.
Mr. Mathur said it will also be easier to deliver on monetary policy.
“Apart from the evolving growth-inflation dynamics, the recent weakening of the US dollar supports rate cuts that are relatively independent of US monetary policy.”
The Monetary Board resumed its easing cycle earlier this month, delivering a 25-basis-point rate cut. This brought the benchmark to 5.5%.
BSP Governor Eli M. Remolona, Jr. has signaled there is room for further rate cuts this year but in “baby steps.” — Luisa Maria Jacinta C. Jocson
