The Philippine economy continues to grapple with both domestic challenges and global uncertainties that demand careful fiscal management and strategic policy adjustments. Factors such as geopolitical tensions, disrupted supply chains, and volatile global financial conditions are making economic planning increasingly complex.
These critical economic issues were the focal point of a recent webinar hosted by the Philippine Institute for Development Studies (PIDS), where experts examined the effects of external shocks on domestic economic stability and explored potential policy solutions. With consumer activity playing a pivotal role in the nation’s recovery, the discussion underscored the importance of balancing short-term interventions with long-term structural reforms.
PIDS Senior Research Fellow Dr. John Paulo Rivera noted that the Philippine economy experienced moderate growth in the last quarter of the year, although it lagged behind some of its ASEAN neighbors. This slower pace was largely attributed to ongoing inflationary pressures, elevated borrowing costs, and weaker external demand.
“While the Philippines’ growth was still higher than Thailand and Malaysia, global demand uncertainties had a more significant impact on the country,” Rivera explained. He emphasized that achieving sustained economic growth requires coordinated policy efforts at both national and international levels, particularly in areas such as trade and investment policies.
Dr. Rivera also discussed the role of government spending in shaping economic performance, highlighting its impact on domestic demand and inflation. These factors, in turn, can prompt monetary tightening by the Bangko Sentral ng Pilipinas (BSP) to prevent an economic “overheating” scenario, where rapid growth leads to excessive demand and rising prices. He stressed that the BSP’s careful adjustments to policy rates are designed to balance inflation control with economic growth while considering global economic trends.
In a separate presentation, former PIDS Supervising Research Specialist John Paul Corpus emphasized the value of macroeconomic models in understanding external pressures. He explained that economic modeling allows policymakers to predict fluctuations in oil prices, exchange rates, and government spending, helping them evaluate potential policy responses and their impact on the country’s economic recovery.
Security Bank Chief Economist Angelo Taningco voiced concerns about global trade disruptions, noting that many world leaders are increasingly aware of the potential for escalating tariffs and the possibility of retaliation. “A global trade war could significantly affect business operations by driving up import costs, which would, in turn, raise production costs for local businesses and increase retail prices for consumers,” Taningco cautioned.
He also highlighted the broader macroeconomic risks of trade conflicts, pointing out that the Philippines, as a net importer, is particularly vulnerable to rising import costs, which could have negative consequences for both local businesses and consumers.
SM Investments Economist Robert Dan Roces took a broader perspective, emphasizing that economic data must reflect the realities faced by over 100 million Filipinos dealing with both local and global challenges. “We are still outpacing many of our neighbors while confronting the same global issues,” Roces remarked. “But we must remember that economic growth should be inclusive.”
He also pointed out that GDP figures alone do not tell the full story. “GDP numbers are like a social media profile—they don’t capture the full picture. The key question is not just how fast we are growing but who benefits from that growth. Are we building an economy that benefits everyone, or just a select few?” Roces asked.
Finally, Roces emphasized the importance of digital transformation for economic resilience, noting that it should not be confined to any one sector but should serve as a foundational element for the entire economy.
The webinar provided a comprehensive view of the current challenges and opportunities facing the Philippine economy, underscoring the need for careful policy management and long-term strategies to ensure inclusive and sustainable growth.
