Fiscal gap to widen this year: BMI By Reine Juvierre S. Alberto
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HE Philippines’s fiscal consolidation efforts are at risk of stalling, as the budget deficit is projected to widen this year due to tariff shocks and pressure to increase public spending. In a commentary, United Kingdombased research firm BMI, a unit of Fitch Solutions, said the Philippines’s fiscal deficit will widen to 5.9 percent of the gross domestic product (GDP) in 2025. “The likelihood of the government having to incur a larger fiscal deficit has risen significantly against the backdrop of heightened geopolitical uncertainty,” BMI said. On April 2, United States President Don-
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WORLD MARKETS EXPLODE AS TRUMP ANNOUNCES 90-DAY TARIFF REPRIEVE, EASING TRADE WAR FEARS
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ald Trump imposed a 17-percent reciprocal tariff rate on Philippine exports. This will delay the Marcos administration’s fiscal consolidation efforts as this would reverse the country’s attempt to reduce the budget shortfall. The government projects the deficit-toGDP ratio to ease at 5.3 percent this year, after hitting its 5.7-percent goal in 2024. As a result of higher tariffs, BMI said the Philippines’s output would be reduced by around 1.1 percentage points, which puts the government’s growth target in jeopardy. BMI said the higher tariff rate slapped on the Philippines will be reduced, under its impression that the country will succeed in negotiations with the Trump administration.
“The Philippines remains a vital security partner for the US, particularly as Washington aims to counter Beijing’s growing influence in the South China Sea. This strategic relationship should afford the Philippines some leverage in negotiations,” BMI said. More fiscal support is also needed if lawmakers intend to mitigate the economic fallout caused by the impact of Washington’s protectionist policies, it added. The government will have to increase its expenditure by around 1.4 percentage points from 21.9 percent of GDP to reach the lower bound of the government’s growth target of 6 percent, according to BMI. BMI said lawmakers will employ a
policy mix instead of relying solely on increased public spending to prop up the economy. “We are not implying that it is feasible for the government to run such a wide budget deficit to support the economy over the coming years,” BMI said. “[The] Philippines’s fiscal position hardly recovered from the pandemic aftermath, remaining a clear laggard in its fiscal consolidation process compared to its regional peers,” it added. In February, the Philippines’s fiscal position swung back to a deficit at P103.1 billion. This expanded by 34.35 percent from P76.7 billion in the same month in 2024. Expenditures amounted to P822 billion, outpacing the revenues collected worth P718.9 billion during the month.
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BSP LOWERS KEY RATE BY 25 BPS, MORE CUTS SEEN n
French official to show PHL ‘French way’ of beneficial trade
By Reine Juvierre S. Alberto
A
MORE challenging global environment has prompted the Bangko Sentral ng Pilipinas (BSP) to reduce the key policy rate by 25 basis points to 5.50 percent on Thursday, with further rate cuts seen this year to support economic growth. In the second meeting of the Monetary Board for the year, BSP Governor and MB Chairman Eli M. Remolona Jr. announced that the Target Reverse Repurchase (RRP) rate was lowered by 25 bps to 5.50 percent. The Monetary Board has also adjusted the interest rates on the overnight deposit and lending facilities to 5 percent and 6 percent, respectively. “The Monetary Board noted the more challenging external environment, which would dampen global GDP growth and pose a downside risk to domestic economic activity,” Remolona said. The announcement of the 17-percent reciprocal tariffs imposed on Philippine exports was taken into account, which “clears up a lot of the uncertainty,” Remolona said in the press briefing. “So there’s still some uncertainty, but there’s less of it than before,” he added, noting the 90-day suspension of these tariffs announced by United States President Donald Trump on Thursday. As to the impact of the tariffs on the Philippine economy, Remolona said the BSP is looking at slower growth, like the rest of the world, but they are also looking at lower inflation, unlike the rest of the world.
Low inflation to cushion blow
ASSISTANT Governor Zeno Abenoja said the expected slowdown in global growth could impact domestic economic activity, but falling international commodity prices could cushion the blow. See “BSP,” A2
By Malou Talosig-Bartolome
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BREAKING BOTTLENECKS Luis Reñon, Officer-in-Charge of NLEX Corporation and Finance Officer of Metro Pacific Tollways Corporation (MPTC), led the inauguration of the new NLEX Lingunan Southbound Entry Ramp in Barangay Lingunan, Valenzuela City, on Thursday, April 10, 2025. The 491-meter ramp, a public-private initiative, is designed to ease traffic congestion along Valenzuela’s local roads by offering motorists an alternative entry point to the Paso de Blas Interchange. The project supports ongoing efforts to improve connectivity and reduce travel time in Metro Manila’s northern corridor. NONOY LACZA
CHINA BOOSTS YUAN DEFENSE AS U.S.-CHINA TARIFF WAR PEAKS By Wes Cabangon
B
EIJING—Trade tensions between the United States and China have surged to unprecedented levels, with both sides locking into steep tariff regimes. As of April 9, the United States has imposed cumulative tariffs of 125 percent on Chinese imports—up from 104 percent just days earlier—while China has retaliated with 84 percent tariffs on all US goods. In a parallel move, China has also halted exports of critical rare earth elements to the US, further escalating the conflict and disrupting high-tech supply chains globally. These developments mark one of the most intense phases in the ongoing economic standoff between the world’s two largest economies, prompting Beijing to reinforce economic defenses through currency stabilization and regional diplomacy. Timeline of escalating tariffs
· February 1, 2025: US President Donald Trump signs Executive Order 14195, imposing a 10-percent tariff on all Chinese imports (effective February 4). · February 4, 2025: China responds with 15-percent tariffs on US coal and LNG, and 10 percent on crude oil and machinery (effective February 10). · March 3, 2025: The US raises tariffs to 20 percent. · March 4, 2025: China counters with 15-percent tariffs on US agricultural products and 10 percent on other key goods (effective March 10). · April 2, 2025: The US imposes an additional 34 percent, bringing cumulative tariffs to 54 percent (effective April 5). · April 4, 2025: China announces a matching 34-percent hike, pushing its total tariffs to 49 percent (effective April 10). · April 7, 2025: The US threatens
and then imposes an additional 50 percent, raising its cumulative tariff level to 104 percent. · April 9, 2025: China raises its tariffs to 84 percent and announces a halt to rare earth exports to the US. The US retaliates further by raising tariffs to a final rate of 125 percent. The rare earth export halt is especially significant. These elements—used in electric vehicles, smartphones, wind turbines, and defense systems—are critical to US high-tech manufacturing and national security. China’s decision, framed as a national security measure, is seen as a strategic pressure point in the growing dispute.
issued “window guidance” to major state-owned banks to limit US dollar purchases and monitor foreign exchange flows more tightly. The move aims to stabilize the yuan, which has fallen by 1.3 percent over the past month, hitting its weakest level since December 2007. Authorities say while a moderate depreciation may aid exports, unchecked declines risk triggering capital outflows and undermining domestic market confidence. This latest intervention highlights China’s preference for a managed, stable exchange rate policy—even in the face of significant external pressure.
China’s monetary response: Curbing dollar demand
PARALLEL to its domestic economic adjustments, President Xi Jinping has intensified diplomatic outreach in the region. At a central
WITH the yuan under pressure and global investor anxiety rising, the People’s Bank of China (PBOC) has
Strategic pivot: China builds regional alliances
See “China,” A2
HE French minister delegate in charge of foreign trade has arrived in the Philippines at a time when the United States is planning to impose sweeping tariffs across the globe and potentially disrupting global trade. Laurent Saint-Martin, French Minister Delegate for Foreign Trade and French Nationals Living Abroad, said the timing of his visit to the Philippines “could not be more appropriate.” “As tensions are running high in an increasingly polarized global environment, France is offering nothing less than a mutually beneficial opportunity for most needed political, economic and strategic diversification. “Look at the global landscape today: established value chains are entering times of uncertainty. Some are tempted to leverage trade and investment relationships to further their own geopolitical goals. Let me be clear: that is not the French way. That is not the European way. In an environment that challenging, “derisking” is becoming the key word, and we all need friends we can trust and partners upon whom we can safely rely. “I am here today because France sincerely believes that the Philippines are such a friend and partner, as evidenced by the discussions between Presidents Macron and Marcos Jr.,” Saint-Martin told BusinessMirror in an exclusive online interview. US President Donald Trump has imposed reciprocal tariffs in almost all countries. For the 27-member European Union, the tariff rate is 20 percent. The European Union responded Wednesday with an increase in tariffs for US goods for up to 25 percent. On Thursday, Trump authorized a 90-day pause on reciprocal tariff plans for all countries except China. “We stand united with our European partners. We are determined to defend our interests and our companies. We will stand firm and retaliate if need be. Let me be very clear : neither France nor the European Union want a trade war with the United States. It would be a lose-lose situation. We will always be ready to open negotiations with our American partners, but we will not back down under pressure,” Saint-Martin said. Officials of French companies interested to invest in the Philippines will join Saint-Martin during the visit. They are expected to attend the France-Philippines Business Forum on Friday. “I am traveling with a strong delegation of French companies showcasing the breadth and depth of our know-how,” he said. The French official said he wants to boost bilateral trade cooperation with the Philippines in key sectors, particularly transportation and See “French,” A2
PESO EXCHANGE RATES n US 57.2570 n JAPAN 0.3885 n UK 67.5971 n HK 73.4149 n CHINA 7.7959 n SINGAPORE 42.7802 n AUSTRALIA 35.2245 n EU 62.7250 n KOREA 0.0396 n SAUDI ARABIA 15.2523 Source: BSP (April 10, 2025)