Philippines' growth outlook steady at 5.4% in 2025: Fitch

It highlighted that the external sector has shown resilience amid global trade uncertainty, with exports surging 15.1 per cent in May, the strongest rise this year, ahead of the tariff hike, BMI said in an article this month.

Originally set at 20 per cent from August 1, the US tariff was reduced to 19 per cent after President Ferdinand R Marcos Jr’s July visit to Washington.

This adjustment is expected to trim output by 0.4 percentage points (pp) over the medium term, far less than the 1.4 percentage point hit estimated in April.

Businesses also benefitted from a brief implementation delay to August 7, enabling front-loaded shipments, though BMI warned of a likely export slowdown unless further postponements occur.

The 5.4 per cent forecast is slightly below the Philippine government’s revised 5.5–6.5 per cent growth target set in June, which was adjusted down from the earlier 6–8 per cent range amid global economic headwinds.

The growth averaged 5.4 per cent in the first half (H1) of 2025, with Q2 accelerating marginally to 5.5 per cent.

BMI explained that while domestic demand will continue to anchor expansion, the new US tariff, coupled with weakening global conditions in the second half of the year, will weigh on exports and investor sentiment.

Although interest rates have eased from their peak, the firm cautioned that volatile US trade policies will limit foreign direct investment inflows, leaving little scope for a significant investment rebound in the near term.

Fibre2Fashion News Desk (SG)