MANILA -- The Philippine economy grew faster in 2024 than initially estimated, the Philippine Statistics Authority said on Thursday.

The PSA said it has revised the fourth quarter GDP year-on-year growth rate upward to 5.3 percent from 5.2 percent. As a result, the full-year 2024 GDP growth rate was also revised upward to 5.7 percent from 5.6 percent, the PSA said.

Philippine economic managers had been aiming for a growth rate of at least 6 percent last year. However, a string of destructive storms hit the country in the third and fourth quarters of the year caused much damage to the country's infrastructure, and dampened consumer spending and travel.

The National Economic and Development Authority said that apart from extreme weather events, the Philippines also had to contend with geopolitical tensions, and subdued global demand, which were similar to the challenges it faced in 2023.

These conditions may represent the "new normal," NEDA Undersecretary Rosemarie Edillon said in January when the initial report on 2024 GDP growth was released.

'EFFECTS OF TRUMP TARIFFS ON GROWTH'

For 2025, economic managers are still aiming for a growth rate of 6 to 8 percent. However, BPI Lead Economist Jun Neri warns that the higher tariffs to be slapped by the United States on its trading partners, including the Philippines, may weigh on economic growth.  

"The Philippine economy could experience a 0.5 percent reduction in GDP growth as a result of lower demand for exports and weaker industrial output," Neri said in a briefing paper sent to journalists.

The tariffs are expected to raise costs for Philippine exporters, making their products less competitive in the US market. Key sectors likely to be affected include electronics and agricultural products, Neri noted.

"Industrial production in the country may slow by as much as 1.7 percentage points, reflecting the disruption to supply chains and the negative knock-on effects from reduced trade with the US," he added.

"The country’s exports are expected to swing from originally projected 6.1 percent growth to a contraction of -4.2 percent. This highlights the vulnerability of the country’s export sector to US trade policy changes," Neri added.

Aside from these, the tariffs may also affect the Philippines indirectly through the financial markets, Neri said.

"The Peso may see more volatility due to heightened risk aversion and concerns over export performance. A weaker peso could push up import costs, adding to inflationary pressures. This, in turn, may limit the Bangko Sentral ng Pilipinas' ability to cut interest rates aggressively, as maintaining market stability could take priority."

But the Philippines may also see indirect benefits from the Trump tariffs on other countries. 

"Softer global demand could put downward pressure on oil prices, easing import costs. Additionally, exporters from countries like China, facing higher tariffs, may redirect their goods to alternative markets, including the Philippines, which could help contain inflation."

As a mainly consumption-driven economy, the Philippines is also less vulnerable than its peers in the ASEAN-5, which are more heavily reliant on trade, he said.