As far as the University of Asia and the Pacific (UA&P) is concerned, the economy of the Philippines will still grow stronger in the 3rd quarter by 5.8% despite the 19% Trump tariffs, according to a BusinessWorld news report.
To put things in perspective, posted below is an excerpt from the news report of BusinessWorld. Some parts in boldface…
PHILIPPINE economic growth may pick up in the third quarter despite higher US tariffs and “milder” typhoons, the University of Asia and the Pacific (UA&P) said.
“Despite the Trump tariffs, milder typhoon season will help accelerate GDP expansion in Q3 to 5.8%, given a low base in 2024,” it said in its latest The Market Call released on Friday.
If realized, this would be faster than 5.2% in the third quarter of 2024 and 5.5% print in the second quarter. This forecast is also within the government’s revised 5.5% to 6.5% target this year.
“Consumer spending remains strong, aided by low inflation but limited by new US taxes on OFW (overseas Filipino Worker) remittances,” UA&P said.
Inflation cooled to a near six-year low of 0.9% in July as utilities and food costs continued to ease. This brought the seven-month average to 1.7%, slightly below the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target band.
UA&P said government infrastructure spending may also regain momentum in the third quarter. This was after state spending slumped due to the 45-day election ban on public works spending from March 28 to May 12.
UA&P said residential construction will remain subdued due to elevated policy and interest rates.
The Bangko Sentral ng Pilipinas (BSP) has so far lowered borrowing costs by a total of 125 basis points (bps) since it began its easing cycle in August last year. The policy rate now stands at 5.25%.
UA&P said the US dollar rate will “move either way” depending on rate cuts by the BSP and the US Federal Reserve.
“The peso-dollar rate has a fundamental depreciation bias although it will depend much on extent and timing of policy rate cuts by BSP and the Fed,” it said.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the economy of the Philippines will be able to grow stronger in the 3rd quarter even though the 19% Trump tariffs are already in effect? Do you see any signs of Philippine exports to America slowing down already?
You may answer in the comments below. If you prefer to answer privately, you may do so by sending me a direct message online.
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