Finance Secretary Ralph Recto has expressed confidence that the Philippine growth target until 2028 is still intact despite uncertainties both home and abroad, and Donald Trump’s comeback to the presidency.
In an interview with Bloomberg’s Haslinda Amin on Jan. 20, Recto said that he is not concerned about how the Philippine economy would fare amid recent developments.
He said, “In the last two years of President Ferdinand ‘Bongbong’ Marcos’ administration, we grew by six percent, one of the highest in the world and second in the region. Next year we see a six-to-6.5 percent growth due to high interest rates,” he said.
“Last year we got interest rates by 75 basis points, we expect maybe another 50 basis points this year. This will help us grow by six-to-6.5 percent in 2025 or in 2026,” he added.
Pressed on the possible impact of Trump’s coming back to power, Recto said that “Trump, it seems, is a practical person, so he probably would increase tariffs on countries … or probably on countries with high trade deficits. But the Philippines is not in that position, and the only uncertainty is in regard to tariffs and inflation.”
“Of course, if tariffs are imposed and inflation goes up, then interest rates may not go down as much as we want it to,” he said.
He emphasized that the Philippines will probably be in a vulnerable position only in regard to inflation and interest rates, but directly not so much.
Biggest risk
In regard to the outlook of the economy, Recto said that the biggest risk would be the global uncertainty, particularly geopolitical tensions. But he pointed out that he is “very positive on the second Trump presidency” because, “now there is a ceasefire in the Middle East and in Asia, which should be good for oil and commodity prices.”
In terms of global trade risks, especially of Trump’s tariffs on China that could result in dumping of Chinese goods in Southeast Asia, Recto said that the Philippines is not so much concerned about it.
“There are also opportunities for Western companies for leaving China and maybe coming to the Philippines, and export to the United States. “There are opportunities for the Philippines as well,” he pointed out.
Recto also said that in the Philippines, the growth is really coming from household consumption. So, from private consumption, about maybe 60, 65 percent of our economy is household consumption.
He added that unemployment rate is the lowest it’s ever been. About 50 million Filipinos have better-paying jobs in the Philippines. “That’s where the growth is really coming from.”
Moreover, Secretary Recto said that the country has “healthy gross international reserves; we have something like $107 billion in gross international reserves. We have a thriving BPO industry. We generate up to $35 billion of revenues. We have robust OFW remittances. Tourism did well in the Philippines last year. People going to the Philippines: Seven million tourists visited the country last year, but they spend twice the average amount. So, we’ve been able to generate something like P2 billion last year from tourism receipts.
Furthermore, Secretary Recto mentioned pending tax measures to be passed before the year ends should interest rates need to be increased.
“We do have a few revenue measures in Congress right now. We expect to pass them before the end of the year. Maybe … after the [May midterm] elections,” Recto said.
“It’s also preparing for higher interest rates just in case so that we have additional revenues,” he added.
