Philippine economy still vulnerable to escalating US-China trade war
Although the Philippine economy is considered relatively insulated from the potential trade war, Security Bank Corp. chief economist Angelo Taningco cautioned that the country is not entirely immune, identifying the trade war's prospects as the gravest threat.
Despite expecting less impact compared to economies like China, Japan, and India, Taningco emphasized, "we're not purely unscathed from a trade war."
He pointed to pre-pandemic studies showing the Philippines was "adversely affected" by the U.S.-China trade conflict. Taningco maintained his 6.1 percent gross domestic product (GDP) growth forecast for 2025, driven by the midterm elections.
For 2025, Taningco retains his expectation that the local economy will expand faster at 6.1 percent, driven by the midterm elections.
“There are so many upsides this year versus last year,” he said, stressing that gross domestic product (GDP) growth during elections typically outpaces the year before an election.
To recall, GDP growth fell short of the government’s revised target of 6.0 to 6.5 percent when it only clocked in at 5.6 percent, following the lower-than-expected 5.2 percent in the last quarter.
For 2026, Taningco slightly lowered his GDP growth forecast to six percent, the lowest end of the government’s target range of six to eight percent. Taningco said that an expansion rate around this level is somewhat flat, and his lower prediction is attributed to subsiding spending post-elections.
With the central bank’s recent pause on policy easing, Taningco said that the key interest rate will be reduced consecutively in June and October, each a quarter-point cut—a total of 50 basis points (bps) in cut this year. He cited inflation, which remains subdued, and yield movement as the major factors to these cuts.
Meanwhile, he expects the increase in consumer prices to accelerate at 3.2 percent, unchanged from the 2024 full-year inflation. For 2026, he expects this to inch up to 3.5 percent, reaching the upper range of the government’s two- to four-percent target band.