J.P. Morgan paints rosy picture for Phl economy

Global investment bank J.P. Morgan expects the Philippine economy to expand by 5.3 percent this year and five percent in 2026, outpacing most of its Southeast Asian peers amid headwinds from global trade tensions and shifting monetary policy in the United States.

- By KEISHA TA-ASAN

In an interview with The STAR, J.P. Morgan ASEAN equity strategist Khoi Vu said the Philippines' relatively low dependence on exports makes it more resilient to external shocks compared to neighbors such as Thailand, Malaysia, Vietnam and Singapore, where exports account for as much as 70 percent of gross domestic product (GDP).

Vu said that several Association of Southeast Asian Nations (ASEAN) economies are highly exposed to exports, making them vulnerable to US trade policy and tariffs from an external perspective.

"By contrast, the Philippines' export-to-GDP ratio is much lower, so the economy is relatively insulated. We are forecasting a GDP growth of 5.3 percent this year and around five percent next year, which is more resilient than peers."

Vu noted that consumption and private investment will be the main growth drivers, supported by easing inflation, lower interest rates and improved consumer sentiment.

Jeanette Yutan, J.P. Morgan's Philippines head of research, explained that their GDP forecast already takes into account the potential drag from reciprocal tariffs.

"If those effects are delayed or smaller than expected, then 5.3 percent could move up closer to 5.5 percent," she said during the same interview.

The Philippine economy grew by 5.5 percent in the second quarter, bringing the first half average to 5.4 percent. The government is targeting a slightly higher growth rate of 5.5 to 6.5 percent this year.

Yutan stressed that upside risks exist, but much would depend on fiscal spending and the country's ability to attract foreign direct investments.