BMI trims PHL growth forecast

FITCH SOLUTIONS unit BMI cut its gross domestic product�� growth forecast for the Philippines this year to 6.2%, amid a general tempering of growth expectations across the region in the face of a looming trade war.

In a report, BMI said its earlier projection was 6.3% issued in February.

It maintained its growth forecast for 2026 at 6.7% and expects growth of 6.6% between 2027 and 2029. All its forecasts fall within the government’s 6-8% full-year target band for 2025 through 2028.

The economy grew 5.6% in 2024, missing the government’s 6-6.5% target.

“We expect that India will remain Asia’s fastest-growing large economy, expanding by 6.6% in FY2025/26. The country will be followed by the Philippines (6.2%) and Indonesia (5.3%),” BMI said.

In an interview with Bloomberg TV, Finance Secretary Ralph G. Recto on March 19 expressed confidence the Philippines will expand by at least 6% this year.

Meanwhile, Budget Secretary Amenah F. Pangandaman said a Development Budget Coordination Committee meeting is expected to review targets at the end of March.

BMI also left its growth forecast this year for Asia unchanged at 4.5%, but warned that US trade policy could pose risks to manufacturing exporters.

Ahead of the reciprocal tariffs due on April 2, US President Donald J. Trump unveiled a 25% tariff on imported cars and light trucks starting next week, Reuters reported.

BMI said that risks to the outlook for Asia are tilted to the downside, as countries such as Vietnam and Cambodia have established a “complex cross-border supply chains” which makes them heavily dependent on exports.

“Strong exports provided a boost to headline growth in 2024 and a tariff-induced hit to global trade would create a significant headwind,” BMI said.

Meanwhile, BMI Chief Economist Cedric Chehab found it surprising that US President Donald J. Trump remains silent on Southeast and East Asian tariffs following a meeting with Japanese Prime Minister Shigeru Ishiba.

He said it might be possible that Mr. Trump is waiting for the April 2 deadline.

“Maybe because he realizes that with East Asia and Southeast Asia,it’s important to maintain very strong diplomatic relations, because if Trump wants to pivot towards applying greater pressure on China,then he has to do it from Asia. So perhaps that’s one of the reasons,” he said.

Mr. Chehab speculated that even if no tariffs are imposed on the region, slower US and Chinese growth “will naturally impact Southeast Asian economies.”

BMI also lowered its global forecast to 2.5% for 2025 from its previous projection of 2.6% issued in February, largely due to its revision to the US growth forecast, which it lowered from 2.1% to 1.9%.

“Let’s say Trump were to implement a 10% tariff on Southeast Asian economies;that would certainly be negative for regional growth within Southeast Asia, (which are) very open economies,” he said.

In the report, BMI said its core assumption is Mr. Trump will increase the average effective tariff rate by between 5-8 percentage points, to a level of about 8-11%.

“Given Trump’s more aggressive stance of late, we have been flagging the risk that the average tariff rate could rise to 10-15%,” it said.

BMI also expects the Federal Reserve to remain on pause before cutting by 25 basis points in June or July and again at the end of 2025.

The Fed on March 20 held its benchmark overnight rate steady in the 4.25%-4.5% range, citing expectations of rising prices due to the impact of tariffs on all its trading partners.

Analysts have said the Fed rate cut pause may further delay the Bangko Central ng Pilipinas’ own easing cycle. — Aubrey Rose A. Inosante