Low rates, agriculture seen key to boosting growth, economist says – BusinessWorld Online
THE PHILIPPINES must lower interest rates and improve inclusivity in agriculture by raising productivity and incomes, an economist said.
“These two moves will promote higher GDP growth and more than offset the Trump tariffs,” University of Asia and the Pacific Economist Victor A. Abola said.
In a presentation delivered during the university’s 2025 Midyear Business Economics, Mr. Abola said the Philippines is expected to grow 5.5% this year.
His forecast matches the lower bound of the government’s 5.5-6.5% official target.
He called for a sharp reduction in policy rates saying the monetary authorities have room to ease .
“Our central bank has kept policy rates too high. It reached 6.5%. Now, it’s at 5.25%. I’d like to see it at 2.4%, 3%,” he said.
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has signaled two more rate cuts in 2025, citing inflation’s decline to within the 2-4% target and expectations of slower economic growth.
At its June 19 meeting, the monetary authorities delivered a second straight 25-basis-point cut this year, bringing its policy rate to 5.25%.
Mr. Abola projects inflation to settle at 1.6% this year.
Meanwhile, he said US tariffs could shave between half and a full percentage point off gross domestic product (GDP).
“It gives us only about something like $6 billion in exports. Likely, that may result… in a one percentage point reduction in GDP growth,” he said.
US President Donald J. Trump announced a 19% tariff on Philippine goods, with the Philippines conceding zero tariffs on selected US imports. — Aubrey Rose A. Inosante
