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[B-SIDE Podcast] It’s Liver Lover Day

Follow us on Spotify BusinessWorld B-Side

April 19 is World Liver Day, a day to raise awareness about the health of our often-overlooked yet vital liver. Liver diseases are a leading cause of mortality in the Philippines, accounting for 27.3 per 1,000 deaths, according to a 2023 study published in the Annals of Hepatology.

Experts also warn that 10-20% of Filipinos may have non-alcoholic fatty liver disease, which can lead to serious complications if left untreated.

To share tips on how to take care of our liver, I spoke with Dr. Maria Vanessa H. De Villa, the first surgeon in the country to perform a pediatric liver transplant and the director of The Medical City’s Center for Liver Disease Management and Transplantation.

Interview by Edg Adrian Eva
Audio editing by Jayson Mariñas

Follow us on Spotify BusinessWorld B-Side

What should you do if you are accused of having a fake PWD ID?

Being asked to “verify” their disabilities and diseases in public is shameful and can lead to harmful events within the community, PWD advocate Paolo A. Capino said in an interview.

In this Explainer video, Mr. Capino shares how the PWD community can protect their rights against fake PWD ID accusations in restaurants and other establishments.

Interview by Almira Martinez
Video editing by Jayson Mariñas

What was President Trump aiming for with the reciprocal tariffs?

US President Donald J. Trump created a stir in the international trading order by imposing reciprocal tariffs on all countries earlier this month.

George N. Manzano, a former tariff commissioner and a retired associate professor of University of Asia and the Pacific’s School of Economics, talks about what President Trump was aiming for with this move.

Interview by Patricia Mirasol
Video editing by Arjale Queral

Trump’s tariff pause: what can the Philippines do?

US President Donald J. Trump offered a 90-day pause on the reciprocal tariffs he had imposed on dozens of countries. He kept a baseline 10% tariff in place, however, and increased levies on Chinese goods to 125%.

Former tariff commissioner George N. Manzano talks about what the Philippines can do during this 90-day period.

Interview by Patricia Mirasol
Video editing by Arjale Queral

Japan readies task force for US trade talks as tariff risks cloud economy

COMMONS.WIKIMEDIA.ORG

TOKYO – Japanese Prime Minister Shigeru Ishiba on Friday set up a task force to oversee trade negotiations with the United States, headed by his close aide and Economy Minister Ryosei Akazawa, who domestic media said hopes to visit Washington next week.

While offering no specific date, Mr. Akazawa said he hopes to meet his counterpart, U.S. Treasury Secretary Scott Bessent, as soon as possible to kick off bilateral trade talks that may include currency policy.

“I understand Mr. Bessent is very fond of Japan and undoubtedly has a good impression on our country. He also has a deep financial background, so could be a tough counterpart to negotiate,” Mr. Akazawa told a news conference.

“He seems to mention non-tariff barriers and currency policy as among topics he’d like to discuss. If so, we will obviously respond during the discussions,” he said, adding that Japan will not take any topic off the table.

The first step between Japan and the United States would be to agree on what themes to prioritize, Mr. Akazawa said, adding that no specific agenda has officially been set yet.

In a stunning reversal, U.S. President Donald Trump said on Wednesday he would temporarily lower the hefty duties he had just imposed on dozens of countries while further ramping up pressure on China.

The “reciprocal” tariff imposed on Japan has been cut to the universal 10% rate, from the initial 24%, during the 90-day pause. A 25% duty still applies for automobile imports.

Mr. Akazawa, together with Chief Cabinet Secretary Yoshimasa Hayashi, will lead the 37-member task force consisted of staff from various ministries to seek concessions from the United States on tariffs.

A former transport ministry bureaucrat, Mr. Akazawa is known as among Mr. Ishiba’s closest aides and has deep ties with the domestic agriculture sector. The current role as economy minister is his first ministerial post.

Several domestic media reported on Thursday the government hopes to send Mr. Akazawa to Washington next week to kick-start tariff talks with the United States.

 

LAWMAKERS WANT TAX CUTS

While government officials have revealed little about Tokyo’s negotiating strategy with Washington, lawmakers have begun pressuring the government to take steps to cushion the potential economic blow from the U.S. tariffs.

The ruling coalition, consisted of Mr. Ishiba’s Liberal Democratic Party (LDP) and its partner Komeito, is considering requesting a cut to Japan’s sales tax rate, the Yomiuri newspaper reported on Friday.

The tax cut will be put in place temporarily and target food items, which have seen prices rise steadily, the paper said, citing sources close to Komeito. Japan’s sales tax rate is currently 10% with a lower 8% rate applied to food items.

As implementing tax cuts would take time as doing so would need parliament to pass legislation, the government should also deliver cash payouts to households, Komeito head Tetsuo Saito said at his party’s meeting on Thursday, according to Yomiuri.

But some LDP officials are cautious of cutting the sales tax as the levy is a key source of revenue to pay for ballooning social welfare costs of Japan’s rapidly ageing population, the Yomiuri said.

The calls for expansionary fiscal policy come ahead of an upper house election expected in mid-July, which the LDP is likely to struggle given Mr. Ishiba’s low approval ratings.

The government has ruled out cutting taxes and compiling a supplementary budget to fund cash payouts, saying it was too early to judge how Trump’s tariffs could affect the economy.

As Mr. Trump’s back-and-forth comments on tariffs rattle markets, Finance Minister Katsunobu Kato said on Friday excessive currency market volatility would hurt the economy – signaling Tokyo’s alarm over rapid moves in the yen.

The dollar slumped on Friday as waning confidence in the U.S. economy prompted investors to ditch U.S. assets to the benefit of safe havens like the yen. The U.S. currency slid 0.9% to 143.10 yen, the weakest since October 1. – Reuters

Trump threatens sanctions, tariffs on Mexico in water dispute

REUTERS

U.S. President Donald Trump on Thursday threatened Mexico with sanctions and tariffs in a dispute over water sharing between the two countries, accusing Mexico of breaking an 81-year-old treaty and “stealing the water from Texas Farmers.”

Under the 1944 treaty, Mexico must send 1.75 million acre-feet of water to the U.S. from the Rio Grande through a network of interconnected dams and reservoirs every five years. An acre-foot of water is enough to fill about half an Olympic-sized swimming pool.

The current five-year cycle is up in October, but Mexico has sent less than 30% of the required water, according to data from the International Boundary and Water Commission.

“Mexico OWES Texas 1.3 million acre-feet of water under the 1944 Water Treaty, but Mexico is unfortunately violating their Treaty obligation,” Mr. Trump posted on Truth Social.

“My Agriculture Secretary, Brooke Rollins, is standing up for Texas Farmers, and we will keep escalating consequences, including TARIFFS and, maybe even SANCTIONS, until Mexico honors the Treaty, and GIVES TEXAS THE WATER THEY ARE OWED!” Mr. Trump said.

Mexican President Claudia Sheinbaum, in response, said on X that Mexico has been complying with the treaty “to the extent water is available” amid three years of drought.

Mexico sent a proposal to U.S. officials on Wednesday, Ms. Sheinbaum said, to address the water supply to Texas, which includes short-term actions. Sheinbaum said she instructed her environment, agriculture and foreign ministers to immediately contact U.S. officials.

“I am sure, as on other issues, an agreement will be reached,” Ms. Sheinbaum said.

Mexican officials have routinely pointed to a historic drought fueled by climate change as a barrier to fulfilling water commitments, a scenario for which the treaty offers leniency, allowing the water debt to be rolled over to the next five-year cycle.

The treaty also requires that the U.S. deliver 1.5 million acre-feet of water annually to Mexico from the Colorado River, an obligation that the U.S. has largely fulfilled, although recent deliveries have been reduced due to severe drought, something the 1944 accord allows for.

While Mexico sends far less water to the U.S., it has struggled to fulfill its end of the bargain due to a combination of factors including droughts, poor infrastructure and growing local demand.

Politicians in the U.S. also maintain that Mexico’s growing cattle and pecan industries along the border have used up precious water, and they say Mexico’s failure to deliver its water quota devastates Texan farmers who need it for their crops.

Reuters, citing sources, reported on Wednesday that Mexican officials were scrambling to come up with a plan to increase the amount of water sent to the United States because of growing concern that Mr. Trump could drag the dispute into trade negotiations.

Texas Republicans have publicly accused Mexico of being chronically delinquent in its water deliveries and flagrantly ignoring the treaty.

In an attempt to increase deliveries, Mexico has agreed to send 122,000 acre-feet of water to the U.S. and is working on an option to deliver another 81,000 acre-feet, a Mexican official told Reuters.

But that would still mean Mexico had sent less than 40% of the water it owes under the treaty.

As Mexico’s federal government looks to send more water to the U.S., it looks set to clash with northern Mexican states that closely guard their water supply.

In 2020, Mexico’s National Guard clashed with farmers at the Boquilla dam in Chihuahua state over water deliveries to Texas, killing one protester. – Reuters

China speaks with Saudi Arabia, South Africa about response to US tariffs

A 3D-PRINTED miniature model of US President Donald Trump and the Chinese flag are seen in this illustration taken on Jan. 15, 2025. — REUTERS/DADO RUVIC/ILLUSTRATION

BEIJING – China’s Commerce Minister Wang Wentao had discussions with his Saudi Arabian and South African counterparts to exchange views on responding to the United States’ “reciprocal tariffs”, the Chinese ministry said on Friday.

The conversations took place over separate video calls on Thursday in which China discussed strengthening bilateral economic and trade cooperation with Saudi Arabia and South Africa.

Wang also spoke to Saudi Arabia’s Commerce Minister Majid bin Abdullah al-Qasabi about enhancing cooperation with countries within the Gulf Cooperation Council, while G20 and BRICS’ roles were brought up in his conversation with South Africa’s Parks Tau.

The Chinese commerce ministry’s statements did not elaborate on the discussions. – Reuters

US tariffs on Philippines could affect weapons deal, ambassador says

BW FILE PHOTO

WASHINGTON – Imposing tariffs on U.S. imports from the Philippines could affect the U.S. ally’s ability to afford U.S. weapons systems and a long-discussed $5.58 billion plan to acquire F-16 fighter jets, Manila’s ambassador to Washington told Reuters.

The Philippines faced levies of 17% on its exports to America after President Donald Trump announced global tariffs last week. On Thursday, Mr. Trump announced a 90-day pause on the “reciprocal tariffs” except those on goods from China, but the Philippines and other Southeast Asian countries still face a 10% levy for the next three months.

Philippine ambassador Jose Manuel Romualdez said Manila was keen to negotiate.

“Like most countries … we’re trying to arrange for our minister of trade, for our presidential assistant on international investments and trade, to be able to come here to Washington and have a serious discussion on how we can go through this whole process … on the basis of what is mutually beneficial for both our countries,” he said in an interview.

He referred to Washington’s approval this month of the potential sale of F-16 aircraft made by Lockheed Martin for an estimated cost of $5.58 billion and said tariffs could affect the Philippines economy and its ability to afford them.

“These F-16s … are very expensive for us … and we won’t be able to afford it if, obviously, we won’t have the resources to be able to buy them,” he said.

Mr. Romuladez noted that the Philippines trade surplus with the U.S. was about $4.8 billion.

“The F-16 (deal) is $5.8 billion,” he said. “So that’s a $1 billion surplus in favor of the United States, if we do get to that point that we’ll be able to buy that.

“It’s a quid pro quo. And I think that President Trump has made it clear that tariffs are to balance it off … So if that’s the policy, then we will do it.”

Philippine officials say Manila is also interested in purchasing the Typhon missile system, which the U.S. has deployed in the Philippines for exercises and which experts say could have an important role in the event of a Chinese attack on the self-governed but Chinese-claimed island of Taiwan.

Mr. Romualdez, ambassador in Washington since 2017 during Trump’s first term and a cousin of Philippines President Ferdinand Marcos Jr, said Manila’s U.S. relationship was different to those of other countries given shared losses in World War Two.

He said a U.S. visit by Mr. Marcos to meet Mr. Trump that had been envisaged for the spring depended on their respective schedules, but could take place “any time between … April, May, June.” – Reuters

Philippines central bank chief signals cautious path on rate cuts

BW FILE PHOTO

MANILA – The Philippine central bank is taking a cautious approach to policy easing this year to avoid overheating the economy and reigniting inflation, which has been on a downward trend, Governor Eli Remolona told Bloomberg TV on Friday.

The Bangko Sentral ng Pilipinas resumed its easing cycle on Thursday, cutting its benchmark interest rate by 25 basis points to 5.50% and signaling further reductions to come — in “baby steps” — as it seeks to support the economy amid global uncertainties.

“We don’t want to overdo it,” Mr. Remolona said. “If we overdo it, then we start to exceed capacity, then inflation comes back. So we want to get to the neutral rate smoothly.”

The BSP uses several estimates for the neutral rate — the theoretical level at which monetary policy neither stimulates nor restricts growth — but typically relies on a midpoint, which Remolona said was at around 2%.

He also ruled out inter-meeting rate cuts, noting policy decisions are typically made at scheduled meetings, which occur every other month. Four meetings remain this year, with the next set for June 19.

Mr. Remolona also said the Philippines has not been intervening in the foreign exchange market more than usual this week and was looking at diversifying foreign reserves, not reducing them.

“We have the right mix of assets in reserves,” Mr. Remolona said. – Reuters

BSP resumes easing with 25-bp cut

A vendor sells fruits in Binondo, Manila, Philippines, Jan. 28, 2025. — REUTERS

By Luisa Maria Jacinta C. Jocson, Senior Reporter

THE BANGKO SENTRAL ng Pilipinas (BSP) cut borrowing costs by 25 basis points (bps) on Thursday and signaled further easing amid a “more challenging external environment.”

The Monetary Board on Thursday reduced the target reverse repurchase rate by 25 bps to 5.5% from 5.75%. All 17 economists in a BusinessWorld poll last week predicted a 25-bp cut.

Rates on the overnight deposit and lending facilities were also lowered to 5% and 6%, respectively.

“The Monetary Board noted the more challenging external environment, which would dampen global gross domestic product (GDP) growth and pose a downside risk to domestic economic activity,” BSP Governor Eli M. Remolona, Jr. said.

“On balance, the more manageable inflation outlook and the risks to growth allow for a shift toward a more accommodative monetary policy stance,” he added.

Mr. Remolona noted the risks to the inflation outlook have also eased and remained “broadly balanced” until 2027.

The central bank slashed its risk-adjusted inflation forecasts to 2.3% in 2025 from 3.5% previously; and to 3.3% in 2026 from 3.7% previously. It also now expects inflation to average 3.2% in 2027.

“Like the rest of the world, we’re looking at slower growth, but unlike the rest of the world, we’re looking at lower inflation,” Mr. Remolona said.

“The rest of the world is looking at higher inflation. The lower inflation rates that we’re looking at give us more degrees of freedom,” he added.

Latest data from the local statistics authority showed inflation slowed to 1.8% in March from 2.1% in February, its slowest rate in nearly five years.

This brought average inflation to 2.2% in the first quarter, well within the central bank’s 2-4% target.

“Upside pressures come from possible increases in transport charges, meat prices, and utility rates,” Mr. Remolona said.

On the other hand, downside risks could come from “continuing effects of lower tariffs on rice imports and the expected impact of weaker global demand.”

US TARIFFS
Mr. Remolona said the US’ new tariff announcement had already been factored into its policy decision.

US President Donald J. Trump on Wednesday announced a 90-day suspension on the steep new reciprocal tariffs on most of its trading partners. However, the baseline rate of 10% is still in effect.

The Philippines was slapped with a 17% tariff rate on its exports to the US.

“We have looked at global models. The advantage of the announcement of the reciprocal tariffs is we now have numbers to feed into the analysis. That’s a big thing.”

“It clears up a lot of the uncertainty. Of course, there’s a 90-day suspension of these tariffs, and the tariffs themselves could change. So, there’s still some uncertainty, but there’s less of it than before,” he added.

The central bank is anticipating slower growth, both global and domestic, due to these tariffs.

“Normally, when you have less trade, that’s a negative for growth. Globally, it’s a negative for growth… The new policies, I think, will tend to restrict trade. And that will also tend to slow down growth. Some countries, of course, will be affected more than others.”

Economic managers are targeting 6-8% GDP growth this year, after GDP expanded by 5.6% in 2024.

First-quarter GDP is scheduled to be released on May 8.

“One channel that we are looking at is the expected slowdown in global growth that could affect also domestic economic activity,” BSP Assistant Governor Zeno R. Abenoja said.

He said this latest rate cut could help support economic activity. “There are some downside risks, but we think that there are some reasons to continue to see some firmness in economic activity moving forward.”

“We were looking at growth near the low end of the (growth target). That could still be a scenario moving forward, depending on how the external environment progresses from now on,” Mr. Abenoja added.

‘BABY STEPS’
The BSP chief said they will likely continue cutting rates further this year.

“We contemplate further cuts this year. We can’t tell you exactly how many more cuts, but definitely (there will be) further cuts this year,” Mr. Remolona said.

“We’ll still do it in baby steps. We’ll still do it 25 bps at a time. But I can’t tell you how many more times.”

There are four more Monetary Board policy meetings this year, with the next slated for June 19.

Although they are still in an easing mode, Mr. Remolona noted rate cuts are unlikely to be delivered at every meeting.

“For now, what we’re looking at is a few more cuts, but we have more meetings than the number of cuts we are thinking about,” he added.

He said the current rate is still “slightly restrictive.”

“We’re still somewhat below capacity, which means we have some room to cut without causing inflation ourselves… so somewhat restrictive still.”

This cycle of easing will also likely conclude this year, Mr. Remolona said.

“For now, we think we will have completed the easing cycle in 2025. A possible risk is that we begin to see a hard landing, and then we’ll have to cut by more than 2025. But 2027 is still too far away.”

The central bank will continue to take a “measured approach” on any further monetary easing, he added.

Analysts likewise expect the BSP to continue its easing path this year.

“With inflation set to remain under control, we think the central bank will loosen policy further over the coming months and by a bit more than most analysts expect,” Capital Economics Assistant Economist Joe Maher said in a commentary.

“We expect a combination of easing food price inflation and lower transport price inflation to keep inflation contained over the coming months.”

For his part, Mr. Maher said they expect a total of 75 bps worth of rate cuts for the entire 2025.

Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said “soft inflation and fallout from Trump’s tariff tantrums could mean BSP continues easing cycle through 2025.”

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said they expect the key rate to end at 4.75% this year.

“We remain content, as well, with our below-consensus terminal benchmark rate forecast of 4.75%, which implies three more cuts in the months ahead, one more than what the consensus sees,” he said.

Mr. Chanco said they recently cut its 2025 growth forecast to 5.3% from 5.4%, “in the wake of the US’ decision to levy a blanket 10% tariff against all imports, including those from the Philippines.”

PHL eyes tariff talks with USTR

The US flag and the word “tariffs” are seen in this illustration taken on April 4, 2025. — REUTERS/DADO RUVIC/ILLUSTRATION

By Chloe Mari A. Hufana, Reporter

THE PHILIPPINE government is willing to negotiate with the United States to lower the 17% tariff imposed on Philippine-made goods, according to Frederick D. Go, special assistant to the president for investment and economic affairs.

This comes after US President Donald J. Trump on Wednesday paused the steep new tariffs imposed on most of its trading partners, including the Philippines, for 90 days. However, the blanket 10% duty on nearly all US imports will remain in effect. (Read related story “Trump’s tariff pause focuses trade war on China”).

In a virtual Palace briefing, Mr. Go said he will head to Washington to discuss the tariff on Philippine goods with the US Trade Representative (USTR), but there is no definite date yet.

“This is not about appealing [the tariffs], but about negotiating,” Mr. Go said.

“The best possible outcome is a free trade agreement [between the Philippines and the US] — a free trade agreement means zero tariffs on their side and zero tariffs on our side —that’s probably the best possible outcome of that meeting, but again it’s open communication, dialogue, cooperation and let’s see what we can negotiate,” he added.

Citing the National Economic and Development Authority, Mr. Go estimated the 17% tariffs on Philippine goods will have a “small” 0.1% effect  on the country’s gross domestic product (GDP) over the next two years.

“First of all, what we can clearly see in the reciprocal tariffs imposed by America on the world is that the Philippines has a slight advantage,” he added.

He noted the Philippines has the second-lowest tariffs in the Southeast Asian region, with 17%, compared with other nations that reached as high as 54%. Singapore received the lowest tariff rate at 10%.

Despite this, Mr. Go recognized that any additional tariffs would still impact certain industries in the country.

“We also have to consider that this involves only one export sector of the country, and businesses are generally quite resilient — if one market closes, they look for another market to open. So, the estimate is a 0.1% effect on our GDP,” he added.

Meanwhile, Mr. Go said the government is also eyeing support for exporters that will be affected by the new US tariffs.

“First (we will) engage with our exporters to discuss with them what the possible measures are that they can take, and that the government can assist them in this current situation,” he said.

Mr. Go also underscored the need to monitor how neighboring countries are responding to the tariffs and how Washington will react to requests from its trading partners.

While each Association of Southeast Asian Nations (ASEAN) member-country may have its own position, he noted the need for vigilance and adaptability.

“[For the Philippines], we’re in a semi-good place, but of course we cannot be complacent; we need to keep monitoring what the other countries do, and for ourselves we need to negotiate an agreement that is beneficial for our country and for the businesses and enterprises in our country,” Mr. Go said.

Leonardo A. Lanzona, an economics professor at the Ateneo de Manila University, said the impact of the higher US tariffs will probably be more than merely 0.1% of Philippine GDP.

“While tariffs per se may have little impact on the Philippines, the depression in the US associated with these tariffs will have a much heavier impact. Global production will decline as countries become more and more protectionist,” Mr. Lanzona said.

“The globalization we once knew will no longer be there… Hence, it is not true that the impact will only be 0.1% of the GDP. It is probably going to be more,” he added.

IBON Foundation Executive Director Jose Enrique “Sonny” A. Africa said it may be premature to say the US tariffs will have little effect on the economy.

“The ‘0.1%’ impact on GDP cannot have any basis in fact, because the facts are still unfolding, and hides this with its dubious one-decimal place precision,” he told BusinessWorld in a Viber chat.

Mr. Africa said the Philippine government must also consider the eventual impact of a US slowdown on remittances as well as second-round effects on inflation, interest rates and supply chains.

Moody’s Analytics trims PHL growth forecast on US tariffs

Shoppers crowd Baclaran Market in Parañaque City. — PHILIPPINE STAR/RYAN BALDEMOR

MOODY’S ANALYTICS trimmed its gross domestic product (GDP) forecast for the Philippines amid “weaker growth prospects” due to the impact of the US reciprocal tariffs.

“The US dealt the Philippines a harder blow than we expected, declaring a 17% tariff, so we have trimmed our GDP growth forecast to 5.8% from 5.9% in our March baseline,” it said in a report.

“Again, we’ll have to wait and see whether the diluted 10% tariff will last long term or revert to 17%.”

Moody’s Analytics’ forecast is below the government’s 6-8% target this year.

A chart from Moody’s Analytics showed the Philippines’ 17% tariff could have a direct hit of -0.4% on GDP.

“Although US President Donald J. Trump has just declared a 90-day freeze on most of the harsh tariffs announced a week ago and applied a 10% blanket tariff in their place, the April baseline represents the economic toll they’ll have should they eventually go ahead in full.”

“Even if a 10% tariff on most trading partners becomes a permanent US policy, many Asia-Pacific economies will suffer direct and indirect bruising as intraregional trade diminishes,” it added.

The tariffs are expected to weaken the country’s goods exports to the US, as it is the largest buyer of Philippine-made goods.

The Philippines’ top destination for exports is the United States, accounting for about 17% of the total in 2024.

“Further, slowing growth in China will hit service exports, especially in tourism-related sectors. Prior to the COVID-19 (coronavirus disease 2019) pandemic, Chinese tourists were the country’s largest group of visitors,” it added.

Moody’s Analytics flagged the uncertainties from countries’ tariff negotiations with the Trump administration.

“The big unknown is how negotiations might alter the extent and duration of tariffs in all directions and whether the US will extend its 90-day pause on tariffs for 75 countries.”

Mr. Trump’s tariffs have shown the steepest increases since the 1930s, it added.

“Uncertainty is palpable, with tumbling and volatile equity markets headlining financial market turbulence.”

“The negative and pervasive impact of a sustained rise in uncertainty cannot be understated. Household and business sentiment is crumbling, and if the calamity continues, monetary policy easing that was supposed to characterize 2025 will lose some of its potency.”

Consumers are also expected to spend less amid the economic uncertainty. Businesses are also seen to hold back on investments, it added.

The slew of tariffs also “increase the odds of a global recession,” Moody’s Analytics said.

“Under those tariffs, inflation across Asia would stay subdued amid weaker trade and growth dynamics. Inflation in the US, however, would rise as tariffs increased prices of producer and consumer goods.”

Meanwhile, Moody’s Analytics said Philippine inflation will likely remain within the 2-4% target band for the rest of the year.

It also expects the central bank to deliver another 25-basis-point (bp) rate cut in the second half, following its April policy decision.

‘TOO EARLY’
Meanwhile, Fitch Solutions unit BMI said the Philippine GDP may grow by 5.2% this year if the US implements a 17% tariff on the Philippines.

“Our preliminary estimates suggest that this will reduce output by around 1.1 percentage points (from its current projection of 6.3%), putting the government’s growth target of 6-7% at risk,” BMI said, noting that it is still premature to commit to any revisions to the forecast.

“With negotiations on the cards, it is too early to identify the extent of Trump’s tariffs on the Philippine economy.”

However, BMI said it expects the Philippines to “succeed” in negotiations with the Trump administration and secure a lower tariff rate.

“Regardless of what the final tariff rate will be, we expect lawmakers will resort to increasing public spending to cushion the economic fallout caused by Washington’s protectionist policies,” it said.

“The Philippines remains a vital security partner for the US, particularly as Washington aims to counter Beijing’s growing influence in the South China Sea. This strategic relationship should afford the Philippines some leverage in negotiations.”

BMI retained its forecast that the Philippines’ fiscal deficit will widen to 5.9% of GDP this year from 5.7% last year. This is higher than the 5.3% deficit ceiling set by the Development Budget Coordination Committee.

“If anything, the likelihood of the government having to incur a larger fiscal deficit has risen significantly against the backdrop of heightened geopolitical uncertainty,” it said.

BMI said the government may have to increase its spending to counter the economic impact of the US tariffs.

“Assuming a fiscal multiplier of 0.50 derived from academic research, the government will have to increase its expenditure by around 1.4 percentage points from 21.9% of GDP to reach the government’s lower bound target of 6% on our projections,” it said. — Luisa Maria Jacinta C. Jocson with inputs from A.R.A. Inosante

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