'Phl to gain little from tariff cut'

The Philippines may have avoided steep trade penalties in its latest deal with the US, but analysts say Manila still failed to secure more favorable terms than regional peers despite its close ties with Washington.

- By KEISHA TA-ASAN

HSBC economist for ASEAN Aris Dacanay said the 19-percent tariff rate on Philippine exports offers little competitive edge. A substantially lower tariff rate would have allowed the Philippines to attract more foreign investment.

"Without the relative advantage of a lower tariff rate, economic growth will face headwinds and it will also be harder to attract foreign direct investment," he said.

Dacanay said a lower tariff could have helped the Philippines stand out in Southeast Asia as a manufacturing hub, especially with many firms diversifying away from China.

"At 19 percent, we're now simply in line with Indonesia and only slightly better than Vietnam's 20 percent," he said.

Still, HSBC maintains its growth forecasts for the Philippines at 5.4 percent this year and 5.8 percent in 2026. Both estimates are below the government's targets of 5.5 percent in 2025 and six percent the following year.

Dacanay also said the Bangko Sentral ng Pilipinas may need to cut interest rates further this year amid rising downside risks. HSBC's baseline scenario is for the BSP to lower its key policy rate to five percent by the fourth quarter to support the economy.