The uncertainty about this year’s economic growth for the Philippines has gotten stronger as the Department of Finance (DOF) admitted that achieving 6% growth is quite difficult, according to a Manila Bulletin news report. The DOF pointed to external shocks that are affecting the national economy.
To put things in perspective, posted below is an excerpt from the Manila Bulletin news report. Some parts in boldface…
While the Philippine economy has already been recovering from its deep recession during the height of the Covid-19 pandemic, hitting its growth potential of six percent would be challenging given the global uncertainties spilling over domestically, according to the Department of Finance (DOF).
“We do think that the potential of the Philippines is at the minimum six-percent growth. But of course, it’s quite difficult, especially knowing some of the challenges that we’re seeing,” DOF Undersecretary and Chief Economist Domini Velasquez told reporters during the Philippine thrift banks’ annual convention on Tuesday, July 15.
Just before the initial three-month pause on reciprocal tariffs ended on July 9, United States (US) President Donald Trump had stretched it to Aug. 1, but hiked the rates for Philippine exports to 20 percent from 17 percent previously, repeatedly citing the “significant and persistent trade deficit” that the trade giant has with its former colony.
Velasquez noted that the tariff hike was among the uncertainties that the Cabinet-level Development Budget Coordination Committee (DBCC) had considered in downscaling its growth target for the year, through 2028.
Last month, the economic team slashed its 2025 GDP growth target to between 5.5 percent and 6.5 percent from six- to 6.5-percent previously. Cited as factors were heightened external uncertainties, especially the ongoing conflicts in the Middle East and the imposition of US tariffs.
Finance Secretary Ralph G. Recto told reporters during an informal press chat on Wednesday, July 16, that he expects the economy to accelerate “significantly” in the second quarter compared to the previous quarter.
“In effect, the target is still six percent for the year,” Recto noted, taking off from the recently revised growth goal. “Realistically, it’s probably around 5.7 percent or 5.8 percent for the year. It depends, because there’s a lot of uncertainty—uncertainty with trade policy.”
“But I think the second quarter will definitely be better than the first,” Recto said, noting that the improvement will be driven by both government and household consumption.
The DBCC had also narrowed the growth target range for 2026 to 2028 to six to seven percent, from the previously more ambitious six to eight percent.
“We did recognize those [tariffs]. When we dialed down on our growth target in 2025, it’s really because of the external factors that we were seeing,” Velasquez said.
Let me end this post by asking you readers: What is your reaction to this recent development? Do you think the national economy is not strong enough to achieve 6% GDP growth by the end of this year? What do you think the national government should do to strengthen economic growth and make the Philippines more attractive to foreign investors? Do you think the Philippines still has a chance to convince America to lower its planned tariff on Philippine-made goods?
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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