The Market Monitor Minding the Nation's Business
By Tracy Cabrera
Despite the looming impact of a steep 20% tariff imposed by the United States on Philippine exports, the country’s economy is expected to remain resilient, buoyed by easing inflation and a more supportive monetary policy stance.
In its latest ASEAN macroeconomic outlook, Maybank Research forecasts the Philippine economy to grow by 5.8% in 2025 and 6.0% in 2026, outpacing the regional average and aligning with the government’s medium-term growth targets.
Both projections fall within the Philippine government’s recently revised GDP targets of 5.5% to 6.5% for 2025 and 6.0% to 7.0% for 2026 to 2028.
Maybank said the Bangko Sentral ng Pilipinas’ (BSP) anticipated rate cuts and declining consumer prices would help cushion the blow from the higher US tariff, particularly in the second half of 2025.
“Consumption is expected to remain resilient in 2H 2025, supported by a low inflation environment, easing interest rates, and stable labor market conditions,” the report noted.
The 20% tariff—up from the 17% announced in April—was finalized two weeks ago by US President Donald Trump and will take effect on August 1, 2025. The Philippine government has said it will enter negotiations to seek a reduction.
While key export sectors such as electronics, garments, and auto parts are seen to be most affected, Maybank said the damage would be partly offset by US exemptions on semiconductors, which accounted for 34% of Philippine exports to the US in 2024 and are not subject to the new tariff.
Factoring in product-specific levies on metals and vehicles, the effective US tariff on Philippine goods would rise to 18.9%, from just 1.2% at end-2024. However, this remains far lower than the 36.8% effective rate on Chinese imports, allowing the Philippines to retain a competitive trade edge.
Other stabilizing factors include the peso’s relative stability, improved fiscal management, and low unemployment, with joblessness averaging 4.0% year-to-date. These, analysts say, will help the country weather external shocks better than many of its ASEAN peers.