Moody’s Analytics expects that this year’s dismal foreign trade performance will rebound next year, aligning with government expectations.
“The trade performance this year has been underwhelming, but we see opportunities for a pickup in 2025,” Moody’s Analytics said.
In August, the country’s trade deficit narrowed to $4.38 billion, as imports increased at a slower rate than exports, according to the Philippine Statistics Authority (PSA).
Exports edged up by 0.3 percent, while imports grew by 2.7 percent compared to the same time last year, the PSA reported.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), attributed this modest growth to recent typhoons and flooding that disrupted economic activities, as well as the holiday season in the US and Northern Hemisphere in August 2024, which slowed global trade transactions.
Compared to 2024, President Marcos' economic team has set more optimistic trade growth targets for 2025.
They project a 6.0 percent growth in exports, an increase of one percentage point from the 5.0 percent target for 2024. Meanwhile, import growth is expected to rise by three percentage points, from 2.0 percent in 2024 to 5.0 percent in the coming year.
The export performance forecast for 2025 is expected to remain steady through 2028, with projections indicating a further increase of three percentage points, aiming for an 8.0 percent growth target by 2028.
The interagency Development Budget Coordination Committee’s (DBCC) higher trade growth projections for next year reflect its expectations for faster economic expansion of 6.5 to 7.5 percent in 2025.
“Of course, we want to hit our [Gross Domestic Product] GDP target,” Budget Secretary Amenah Pangandaman told reporters.
Pangandaman recently said that the DBCC will hold its special meeting in early November to reassess macroeconomic assumptions and potentially raise the 2024 growth target from 6.0 to 7.0 percent.
This decision follows a sharp decline in consumer prices in September, and the review will cover projections from 2025 to 2028, including short-, medium-, and long-term outlooks, Pangandaman stated.
Meanwhile, Moody’s Analytics is maintaining its earlier forecast of a 25-basis point (bp) cut in the policy rate to six percent when the Bangko Sentral ng Pilipinas (BSP) Monetary Board meets on Wednesday, Oct. 16.
In last week’s report, Moody’s Analytics forecasted that the BSP may implement another rate cut soon, considering the decline in inflation.
“With headline inflation on the downtrend, the odds are high that the BSP will deliver another rate cut when the Monetary Board meets on October 16,” it stated.