Growth of the Philippine economy is seen to remain the strongest in the Southeast Asian region amidst the impact of the United States’ tariff policies and other global economic risks, with output projected at 5.4 percent.

The latest figure is lower than HSBC’s 5.6 percent growth forecast earlier but Aris Dacanay, HSBC ASEAN economist, said this is just a sequential change given the surprise slowdown in the first quarter of this year to 5.4 percent compared to the 5.9 percent last year.

The first quarter growth, as measured by gross domestic product, is, however, higher than the 5.3 percent in the last quarter of 2024. Full year growth last year is 5.6 percent.

Dacanay, in a briefing, said the latest full-year GDP forecast already incorporates the possible 18 percent reciprocal tariff of the US.

He explained that the latest tariff policies of the US is a risk to domestic growth since it results of uncertainties among investors, impact foreign direct investments, and results of lower imports from the world’s largest consumer-back economy, the US.

These factors are, however, countered by the easing rate cycle of the central bank, the robust domestic consumption, improvement in credit growth, import of capital, and lower inflation partly because the Philippines does not compete with China in terms of exports to the US, among others, he said.

“At 2025, we expect the Philippines to be still the fastest growing economy in the ASEAN,” he said.

Dacanay said they do not discount a slowdown but said drivers are seen to keep the economy afloat and even bolster it to 5.6 percent in 2026.

For the second quarter this year, growth is projected to accelerate to 5.6 percent due to improvements in consumption, investments, service exports, debt servicing, and front-loading of exports due to expected increase in tariffs, as well as the Bangko Sentral ng Pilipinas’ policy rate decisions.

“So at a time when the global economy is expected to slow down in the second half of 2025, when these tariffs kick-in, when the front-loading of exports is finally over, the domestic economy of the Philippines is on its way up and will likely buck the global trend,” Dacanay added.

Aside from the Philippines, other Association of Southeast Asian Nations (ASEAN) members are Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand, and Vietnam. (PNA)