BMI, a unit of Fitch Solutions, is sticking with its 5.4% growth forecast for the Philippines in 2025, saying the economy has shown resilience even as new US tariffs threaten to weigh on exports.
Exports surged 15.1% year-on-year in May, the fastest pace so far this year, as businesses rushed to ship goods ahead of the planned 20% tariff on Philippine exports to the US that took effect on Aug. 7, the research firm said.
The tariff was originally slated to begin Aug. 1, but was delayed by a week. President Ferdinand R. Marcos Jr.’s July visit to Washington also helped trim the rate to 19% from 20%.
BMI said the reduction is expected to “lead to a 0.4 pp (percentage point) reduction in output over the medium term,” far less than the 1.4 percentage point hit projected in April.
The forecast comes as Philippine economic managers in June cut their official growth target to 5.5%–6.5% for 2025, from 6%–8% previously, citing the impact of trade frictions and global geopolitical risks.
Growth in the first half averaged 5.4%, with second-quarter expansion inching up to 5.5% from 5.4% in the prior quarter.
BMI said it maintained its projection as the economy remains “largely (a) domestically driven economy,” even as global headwinds intensify.
“While interest rates have eased considerably from their peak, erratic US trade policies will weigh on global investor sentiment and limit foreign direct investment inflows,” it said. “As such, we see little prospect for a meaningful investment recovery in the near term.”
