Increasing trade protectionism and escalating geopolitical tensions may hinder economic growth in many emerging markets (EMs), such as the Philippines, according to S&P Global.

“We expect rising trade protectionism among major economies to hurt GDP [gross domestic product] growth in most emerging markets (EMs), though its impact will depend on policy specifics,” said Elijah Oliveros-Rosen, emerging markets chief economist, in S&P Global’s monthly report.

As such, Oliveros-Rosen projects a 5.5 percent average growth rate for the country this year, way below the government’s revised six to 6.5 percent growth target. It also stressed that for 2025, most EMs will expand at a slower pace than usual.

Specifically, US protectionism could negatively impact credit conditions in developing countries. However, S&P Global economist Vishrut Rana noted that trade in EMs has remained “resilient” throughout most of 2024 due to steady global demand for goods. 

However, as the economic recovery slows, trade growth is expected to slow down as well.

In addition, higher tariffs on China or broader trade restrictions pose significant risks to EM growth and financing, although “trade diversion from China” could have some benefits.

“Overall, we see trade restrictions as negative for the region’s open economies,” Oliveros-Rosen said.

“However, we expect falling interest rates and steady, albeit slower, economic growth to provide resilience,” he noted.

Thus, S&P Global has raised its expectations to six percent growth for 2025 and 6.2 percent in 2026. Although in the lower end, these figures fall within the government’s six-to-eight percent target band.

Meanwhile, Oliveros-Rosen expects the Bangko Sentral ng Pilipinas (BSP), like other EM central banks, to “adopt a more cautious stance, but monetary easing will continue.”

Similar to the general expectation of private sector economists, Oliveros-Rosen is seeing a total of 100-basis-point (bps) cut in the country’s key interest rate, “which should support financing conditions.” 

S&P Global recently upgraded the Philippines’ credit outlook to “positive” from “stable,” citing strong economic performance and effective policies. It also maintained the country’s sovereign credit ratings at “BBB+” for long-term and “A-2” for short-term.