GROWTH in the Philippine economy may now lean toward the low instead of the high end of the government’s projected growth range for 2025 given the current global uncertainty, the National Economic and Development Authority (NEDA) said.
In a press briefing in Pasig City on Monday, NEDA Secretary Arsenio Balisacan said a more realistic assumption is for the economy to grow closer to 6 percent, the low end of the 6 to 8 percent full-year growth forecast by the government.
NEDA said it has not totally shelved the possibility of achieving a 6 percent to 7 percent growth for gross domestic product (GDP) this year.
“Next month when we have more information about the first quarter, not just GDP but all other numbers, we have a sound basis for decision (if there needs to be a revision in the growth assumptions),” Balisacan said.
“I think that given the uncertainty, and it‘s not something that’s likely going to disappear soon … the eight percent may already be not a realistic assumption,” he added.
Balisacan explained that the government used a 6 percent to 8 percent growth assumption this year to have enough leeway in responding to global uncertainty.
“The only reason we had a wide range at that point when we were looking at, and we were deciding on, the targets, growth assumptions, was the realization that the global economy is more uncertain than it used to be. So we wanted to have some flexibility in the way we could respond,” Balisacan said.
“But as things will solidify in the coming months, we hope that we’ll be able to … frame a more realistic trajectory,” he added.
For the entire 2025, 6 percent to 7 percent GDP growth is still “within the realm of possibility,” NEDA said.
“The second quarter is what I see as quite challenging, until we see all these tit-for-tat-scenario in the global marketplace settles,” Balisacan said.
“But I think for the economy, for the entire year, as I said, there is still so much uncertainty, but we can work on that as a matter of strategy and investment programming,” he added.
Q1 GDP results
The government is set to announce the first quarter 2025 GDP results on May 8. The first quarter 2024 GDP grew 5.9 percent.
“If we are going to get somewhat close to that for the first quarter, that to me is a respectable achievement.
But I would like to see, hopefully, 6 percent,” Balisacan said.
Asked about the growth drivers in the first quarter, he said: “Most likely domestic consumption, because we won’t expect that exports will be a driver in the first quarter or even for the year, because of these disruptions in the trade.”
“But then again, this does not mean that we should not pay attention to exports,” Balisacan said.
“I think moving forward, we should be even more paying attention to exports, together with investment, so that we can have these two other pillars of growth, and not just on consumption. So that when the storm settles down, our economy is in a better position to take advantage of those opportunities that will arise,” he added.
US tariff simulations
Meanwhile, simulations made by the government showed the 17 percent tariff rate imposed by the US on the Philippines would have an overall impact of a 1.5 percent increase in the country’s total exports. The simulations also took into consideration a much higher tariff rate of 145 percent for China’s exports to the US.
“When we did our simulation, the net benefits for us in terms of the increases in overall exports, not just for the US but overall, as well as for increases in GDP, are now more favorable for us compared with the reciprocal tariffs. But again, because our exports to the US are of relatively small quantity compared with what you see for our neighbors, the benefits in terms of exports to the US are not that high,” Balisacan said.
The Trump administration has paused its planned 17 percent tariff on Philippine exports for three months, after imposing a 10 percent tariff rate on all exports on America’s trading partners worldwide.
“So I think moving forward, since it’s only a 90-day pause and we don’t know what’s going to happen after that,” Balisacan said, adding that there will also be changes in the products covered by Trump’s reciprocal tariffs.
‘Quite pervasive’ uncertainty
Balisacan sees the uncertainty being “quite pervasive” when it comes to which products would get higher levies … “and that’s what’s going to impact on global trade and the overall economy, including the Philippines.”
Balisacan said this would impact investment and investment decisions by companies.
What the Philippines would like to see is the overall Investment and trade climate settling down, “and becomes more predictable,” he added.
NEDA to DepDEv
On Friday, April 11, NEDA announced the agency would be reorganized as the Department of Economy, Planning,and Development (DepDev).
In a statement, NEDA said President Ferdinand Marcos Jr. signed the Economy, Planning and Development Act or Republic Act No. 12145 on April 10, legislating the DepDev’s new charter.
The new law seeks to strengthen the agency’s mandate, institutional independence and capacity as the country’s primary policy, planning, coordinating and monitoring arm of the Executive branch on the national economy.
“The establishment of the DepDev contributes to sound economic governance by bridging past and future development strategies, ultimately ensuring our upward development trajectory and that economic progress is sustained, remains resilient, and is beneficial to all Filipinos,” Balisacan said.
The reorganization enables the department to function as a full blown Cabinet-level agency.
Another key reform under the law is the institutionalization of the Planning Call, which seeks to strengthen the linkages between planning, budgeting, and monitoring and evaluation by establishing clear standards, guidelines and accountability mechanisms.
This initiative streamlines the integration of development priorities into the budgeting process, reducing inefficiencies and delays, promoting transparency and accountability in government decision-making and ensuring that public resources are channeled to programs and projects most responsive or proven impactful to the country’s development needs, NEDA said.
