HSBC downgrades PH economic growth outlook
The Philippine economy is now seen to grow slower than earlier anticipated this year and the next as the first quarter figures came in short of expectations, the Hongkong and Shanghai Banking Corporation Ltd. (HSBC) said Thursday.
According to HSBC ASEAN economist Aris Dacanay, the Philippine gross domestic product (GDP) is now expected to grow by an average of 5.4% this year, slower than the previous outlook of 5.6%.
'That's all the first-quarter downside surprise so we didn't change much,' he told reporters in a briefing in Taguig City, as the first-quarter growth stood at 5.4% which was higher than the 5.3% in the last quarter of 2024, but slower than the 5.9% in the first quarter of 2024.
'At 2025, we will be or at least we expect the Philippines to still be the fastest growing economy in ASEAN (Association of Southeast Asian Nations),' he added.
The slower-than-expected print in the first quarter also impacted the 2026 growth forecast down to 5.8% from 5.9%.
The latest outlook factors in an 18% reciprocal tariff imposed by the United States on the Philippines, which Dacanay said is the latest iteration in the ongoing discussions regarding tariff rates.
Under the earlier announced 'Liberation Day' policy, the United States planned to slap a 17% reciprocal tariff on Philippine goods, which compares with the 34% rate that Manila charges against American goods. This was set to take effect on April 9, but Trump on Thursday announced a 90-day pause on most countries except China, while countries such as the Philippines could still face a baseline 10% tariff.
Dacanay said the Philippines is set to benefit from the tariffs, mirroring earlier pronouncements made by the Philippine economic sector, citing the comparatively better tariff rates the country is set to have compared with its regional peers.
With this, HSBC also expects Vietnam to lag behind the Philippines with a 5.2% growth, followed by Indonesia with 4.5%, Malaysia with 4.2%, and Singapore and Thailand with 1.7% each.
In terms of key policy rates, HSBC expects the Bangko Sentral ng Pilipinas to make its next cut during the meeting of the Monetary Board in October, but this could come as early as August should the Federal Reserve ease rates in July.
HSBC expects inflation to average 1.8% in the Philippines this year, before accelerating to 2.7% in 2026, both within the central bank's target range of 2.0% to 4.0%. —AOL, GMA Integrated News
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