The Philippines will continue to enjoy the upside of economic growth during the rest of the year given the positive effects of the upward revision of a global growth forecast by the Organization for Economic Cooperation and Development (OECD) for 2025, local analysts said.
Reuters just reported global growth is holding up better than expected, although “the full brunt of the US import tariff shock is still to be felt as AI investment props up US activity for now and fiscal support cushions China’s slowdown.”
In its latest Economic Outlook Interim Report, which Reuters quoted, the OECD now pegs global growth at 3.3 percent, up from an earlier 2.9 percent forecast released in June. It added that US companies are so far absorbing much of the shock through narrower margins and inventory buffers.
Cristina Ulang, head of research at First Metro Investments Corp. (FMIC), said that for every percent improvement in world GDP, the Philippine economy enjoys a 0.19 percentage point increase in its own GDP growth.
Another Philippine analyst also holds a positive view of the higher OECD global forecast, which indicates that countries may also be coping better than expected with the lingering effects of the US’s trade war and other external factors.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the upward revision to global GDP growth “should be positive to Philippine economic growth,” even as an indirect effect.
Ricafort pointed out that the Philippine economy is largely driven by consumption and is less dependent on exports for its economic growth, compared with most of the major Asean economies that are more prone to US President Donald Trump’s higher tariffs, trade wars, and other protectionist measures.
He underscored the need, however, for the Philippines to further diversify its export products and find other more affluent countries around the world, partly through maximizing free trade agreements (FTAs).
The OECD outlook
In 2024, global growth reached 3.3 percent, according to the OECD Interim Economic Outlook. The earlier projection for growth for 2026 is kept steady at 2.9 percent, as early stockpiles of goods accumulated in anticipation of higher tariffs are drawn down, and as the implementation of tariffs and continuing policy uncertainty weigh on investment and trade, the report said.
The OECD said that the global economy appeared more resilient than anticipated in the first half of 2025 despite the instability brought by the US’s trade war.
It noted, however, that downside risks “loom large as higher barriers to trade and geopolitical and policy uncertainty continue to weigh on activity in many economies.”
The OECD also said US bilateral tariff rates have increased on almost all countries since May, with the overall effective US tariff rate up at an estimated 19.5 percent at the end of August, the highest rate since 1933.
The full effects of tariff increases meanwhile have yet to be felt – with many changes being phased in over time and companies initially absorbing some tariff increases through margins – but are becoming increasingly visible in spending choices, labour markets and consumer prices, it said.
“Signs of softening are appearing in labor markets, with rising unemployment rates and declining job openings as a share of the unemployed in some economies, including the United States,” it added.
“To strengthen economic growth prospects, a key priority is to ensure a lasting resolution to trade tensions. We recommend that governments engage productively with one another to make international trading arrangements fairer and function better, in a way that preserves the economic benefits of open markets and rules-based global trade,” said Mathias Cormann, OECD Secretary-General.
Central banks should also remain vigilant and react promptly to shifts in the balance of risks to price stability, the OECD said.
“Provided inflation expectations remain well-anchored, monetary policy rate reductions should continue in economies where inflation is projected to moderate towards the central bank’s target,” it added.
