Fallout from a possible further contraction in the US economy may eventually weigh on Philippine growth, prompting domestic companies to reduce capital expenditures this year, executives interviewed by this paper said.
So far, companies are also in a wait-and-see mode on how the uncertainty of a US-led tariff war will affect the prospects of global businesses.
“In general, local corporates will adjust their capex plans based on any prospective change in the domestic economic conditions,” Juan Paolo Colet, managing director at ChinaBank Capital Corp., said on Saturday.
“However, if we start seeing indications of a deep or protracted US economic contraction that could materially dampen Philippine economic growth, then it is highly likely that many companies would begin cutting back on investment,” Colet said.
ChinaBank Capital’s current assumption is that companies will keep what capital expenditure plans they have announced so far, as the Philippine economy “remains on a growth trajectory in the face of a mild and transient US recession.”
Without naming any specific company, Eduardo Francisco, president of BDO Capital and Investment Corp., said there are some companies “postponing” their capital expenditure plans in the face of global uncertainties while negotiations over the reciprocal tariffs imposed by the US on its trading partners are still unfolding.
In an investors note released late Friday, online stock brokerage 2tradeasia.com noted the 0.3 percent gross domestic product (GDP) contraction in the first quarter reported by the US is the first negative print since early 2022.
It was largely driven by a 41 percent surge in imports as American businesses rushed to front-load inventory before the fallout from US President Donald Trump’s reciprocal tariffs becomes more pronounced.
“Markets were caught off-guard (reasonably), having expected modest growth, and are now recalibrating expectations for the Fed, with rate cuts back on the table as early as third quarter,” 2tradeasia said.
Markets were expecting the US economy to grow by 0.2 percent.
2tradeasia.com said the question is whether the contraction is a one-off inventory distortion or the start of a broad slowdown, with the US Fed now facing “a narrowing path of cutting too soon and risk credibility or wait too long and risk further contraction.”
In a separate interview on Friday, John Liam Limbo, investment analyst at 2tradeasia.com, said businesses are “keen” on observing how the US tariffs will play out, and recalibrate their plans accordingly.
Limbo said it is also worth considering the favorable macroeconomic data for the Philippines so far: 1.8 percent inflation in March; a 25-basis-point rate cut by the Bangko Sentral ng Pilipinas; high GDP projections; and the Philippines as one of the region’s winners despite Trump’s “Liberation Day tariff situation.
“With these factors, it’s unlikely that companies will cut their capex because of market fear. But as always, there could be uncertainty going into the future,” he added.
Among the companies that have announced their 2025 capital expenditures, JG Summit Holdings Inc. has allotted P69.2 billion or 29.6 percent lower than the P98.3 billion it announced last year.
SM Investments Corp. reported it will spend P115 billion, a 15 percent increase from P100 billion.
Monde Nissin Corp. has set aside P7.55 billion for 2025, or 55.35 percent higher than its P4.86 billion capital expenditure last year.
Ayala Corp. assigned P230 billion, a 3 percent increase from P223.3 billion.
Converge ICT Solutions Inc. allocated P25 billion or 168.82 percent higher than the P9.3 billion it allotted in 2024.
Alliance Global Group Inc. assigned a lower capital expenditure of P63 billion, a 7.35 percent decline from P68 billion.
Semirara Mining and Power Corp. reported it will spend P6.9 billion this year, or 15 percent more than its P6 billion capital expenditure in 2024.
