By means of Luisa Maria Jacinta C. Jocson And Aaron Michael C. Sy, Reporters
The Filipino economy The greatest risk this year is the imminent global trade war, Security Bank said, so that the Central Bank can also lead to the central bank more dependent on these uncertainties.
“We are less affected compared to China and Japan as the car rates ever (penetrate). But we are not purely intact from a trade war, “said Security Bank Corp. Vice president and research division Head of Angelo B. Taningco to reporters on Wednesday.
“If part of the global value chain, we are also affected in terms of the growth of our exports, it will become weaker.”
Security Bank expects that this year’s gross domestic product (GDP) will grow by 6.1%, on the low side of the 6-8% of the government.
However, this basic case does not take into account the impact of a possible trade war.
Mr Taningco said it will be “difficult” for the Philippines to grow by 6.1% if the trade inflection occurs.
“It depends on the size of the trade war. It also depends on how much the rate will be increased, “he added.
Markets are braced for the potential impact of the trade policy of US President Donald J. Trump, such as mutual rates for all countries that tax the import of the US.
Since he took office in January, Mr. Trump has imposed 10% duty on Chinese input. A rate of 25% on Mexico and Canada, as well as a rate for all steel and aluminum imports set to take effect next month.
Mr Taningco said that if the US pushes his plans for mutual rates, other countries are expected to take revenge.
He said that the “tit-for-tat” retribution will probably be more widespread than during the first term of Mr Trump, because more countries are involved.
Policy impact
The series of rates will have IMplants on American inflation and Monetary relaxation, which can also influence its own rate-cutting cycle of the Philippines.
“It will be worse for inflation in the US if they do it next to tax cuts. Inflation on the demand side, that is narrower, because inflation will spine. So no more cuts, “said Mr. Taningco.
“The growth will fall and that will be felt by consumers. Normally, when they are afraid, consumers in the US, they withdraw their spending plans. “
This can encourage the Bangko Sentral NG Pilipinas (BSP) to “be more external,” Taningco said, in the midst of increased global uncertainty.
“If the rates are increased sharply, the prospects for tariff reductions in the US can decrease. But on closer thinking, your growth prospects will do that reduce. But the central bank has a double mandate. It will be a delicate balance. “
Security Bank expects the BSP to lower this year with a total of 50 basic points (BPS) via 25 BP cuts on each of the meetings of June and October.
Sir Taningco said that the interest rate is not yet a concern. “It is not yet necessary to (enter) lockstep (with the FED) because of the uncertainties,” he said.
‘But if you ask me now, it is safer to lock. If the Fed cuts now, we can also cut hypothetically. “
The BSP left the benchmark percentage unexpectedly unchanged at 5.75% during the meeting of 13 February. BSP -Governor Eli M. Remolona, Jr. said that the break was due to ‘Global Trade university’s’. This after the central bank has reduced the rates at three straight meetings since it started its relaxation cycle in August.
In the meantime, Security Bank expects the PESO to end this year at P58-per-Dollar level. He also said that the PESO will probably violate the record-run P59 marking this year.
“The new risk of a trade war would be much higher across the board, and the implication on the market is that the dollar will have to weaken, although it is a currency of the risk harbor.”
The Peso closed on P57.88 per dollar and strengthened with five centavos from its P57.93 finish on Tuesday.
On the other hand, Mr Taningco said that growth will be supported by election -related expenditure prior to the polls of May.
“Historically, GDP is high during an election year compared to the earlier election year. So there is an advantage this year versus last year, “he said.
Faster consumption
In the meantime, UBS Investment Bank Global Research expects the Filipino GDP to grow by 5.9% this year, faster than 2024 amid a recovery in domestic consumption and investments.
“We see an improving growth prospects for the Philippines. We predict the GDP growth for speeding up 5.6% in 2024 to 5.9% in 2025, which is almost trend, “said UBS Investment Bank Global Research Asean and Asia -economist Grace Lim in a webinar on Wednesday.
“The underlying positive growth is driven by the domestic demand as both investments and consumption accelerate until 2025,” she added.
Mrs. Lim said that household consumption will be supported by the growth of the labor market and relieving food inflation.
“The labor market still holds up and the unemployment rate is low and stable with around 3%,” she said.
Private consumption, which is good for about three -quarters of the economy, grew by 4.8% in 2024 and delayed of 5.6% in 2023.
The unemployment percentage fell to a record-drill 3.8% in 2024, equal to 1.94 million unemployed Filipinos.
“Based on gradually falling food prices as some of the supply restrictions alleviate and resilient labor income, we still expect that consumption will gradually recover from the second quarter of 2025, after a period of high inflation was weighed on consumer sentiment,” said Mrs. Lim.
Copeling accelerated in January by 2.9%, steadily from December.
However, food inflation alone accelerated up to 4% of 3.5% in December and 3.3% in 2024.
Mrs. Lim noticed that food inflation could see some volatility as a result of food supply shocks resulting from weather -related risks.
“Moreover, we think that government spending can offer some support for growth, in particular in the first half of 2025 … We also expect that private investments will gradually recover as the financial circumstances become less restrictive and as the consumer sentiment gradually assumes,” Mrs. Lim added.
Further monetary relaxation through the BSP, as well as the reduction of the reserve -Ratio of the Banks, is expected to stimulate private investments.
UBS said that this year the BSP expected this year to lower the rates twice, once in April and then in September.