S&P trims PH growth outlook on trade risks
S&P Global Ratings has trimmed its growth outlook for the Philippines through 2027, extending into the penultimate year of President Marcos’ term, though the pace will not stray far from the government’s official targets.
The credit rating agency pointed to mounting global headwinds—most notably higher US tariffs—that threaten to cool investment flows in one of Southeast Asia’s most dynamic economies.
In its latest report, S&P trimmed its forecast for Philippine gross domestic product (GDP) growth in 2025 by 0.3 percentage point to 5.6 percent. Even at that level, the pace would remain within the government’s revised target of 5.5 to 6.5 percent.
The firm also lowered its projections for the years ahead, cutting its 2026 forecast by 0.2 percentage point to 5.8 percent and its 2027 forecast by 0.1 point to 6.5 percent. For 2028, S&P sees growth at 6.8 percent.
The updated projections suggest that Manila may still meet its official goal of 6 to 7 percent growth in 2026 and carry that momentum through the end of Mr. Marcos’ term. Still, the downgrade underscores the country’s vulnerability to external shocks.
“Philippine GDP growth was 5.4 percent in the first half, quicker than many economies in Asia. However, this was still below-trend, as well as below our expectations,” Vince Conti, an economist at S&P, said in an interview.
“Private consumption growth, investment, and household confidence are still relatively subdued. We expect that both global and domestic uncertainty would continue to weigh on investment growth in the near term,” Conti added.
Other observers have raised similar concerns.
Should the US-China trade standoff escalate beyond tariffs into sanctions, Thomas Rudgley, a senior economist at Oxford Economics, warned that key supply chain hubs—including Vietnam, Singapore, Malaysia, Thailand and the Philippines—would likely be caught in the crossfire.
“These nations hold greater importance for China’s economy than for the United States, potentially making them targets of US intervention aimed at influencing outcomes,” Rudgley wrote.
In a separate note, ANZ Research argued that the Philippines could still draw strength from consumption, fueled largely by retail lending. But it warned that weak growth in borrowings for asset creation—such as mortgages—underscores households’ lingering concerns about income prospects.
“This pattern of spending is unhealthy,” ANZ said.
Looking ahead, S&P’s Conti noted that the Philippines’ reliance on services exports, rather than goods trade, could soften the blow from elevated trade tensions.
“With inflation low and likely to remain under control in the next few years, the Bangko Sentral has room to continue its easing path to support growth,” he said.
