Security Bank chief economist Angelo Taningco expects economic growth this year to reach 6.1 percent due to spending for the midterm elections and if global trade conditions remain relatively normal.

This is higher than last year’s actual growth of 5.6 percent, according to the Philippine Statistics Authority. It also falls within the 6 to 8 percent estimated by the Development Budget Coordination Committee in its meeting in December last year.

“Historically, economic growth is higher when there are elections and even higher if there are presidential elections,” Taningco told the media on Wednesday.

Filipinos are expected to vote for candidates for national legislative positions and local government units on 12 May.

Citing data from the Commission on Elections, IBON Foundation said a senatorial candidate spends up to P350 million on campaign activities, while a presidential candidate shells out up to P3 billion.

“China and the United States will likely exchange retaliatory measures. If China becomes heavily affected, Philippine exports will slow,” Taningco said.

His outlook came after US President Donald Trump announced plans to raise tariffs on all metal imports. Previously, Trump had ordered a 25 percent tariff on Chinese and Canadian exports, and a 25 percent tariff on steel and aluminum imports from all countries.

Thus, Taningco said Philippine exports of semiconductors might slow if China fires back with the same trade restriction against the US, leading to tighter budgets among Chinese firms.

However, the economist said lower income from possibly weaker goods exports will be offset by sustained revenues from the business process outsourcing sector.

IT and Business Process Association of the Philippines president Jack Madrid said the Philippine BPO industry grew its revenues by 7 percent to $38 billion last year compared to 2023. Globally, he said the average growth stood at 3.5 percent.

Aside from the strong services sector, Taningco said economic growth will be driven by a manageable inflation rate of 3.2 percent this year and 3.5 percent in the next as countries wait for clearer impacts of Trump’s policies.

His forecasts are slightly lower than the 3.5 percent estimate of the Bangko Sentral ng Pilipinas (BSP) for this year and 3.7 percent in 2026.

“The global expectation of a trade war is now more widespread,” Taningco said.

The BSP aims to stabilize inflation within 2 to 4 percent.

Taningco also projects the BSP to further cut its policy rate for loans by a total of 50 basis points to 5.25 percent this year to spur stronger household spending.

National statistics showed household consumption slowed to 4.7 percent in the fourth quarter last year from 5.2 percent in the third quarter amid the still elevated average inflation of 3.2 percent in 2024.

Taningco said the BSP will still be likely taking cues from the US Federal Reserve, which might cut its policy rate to also support US economic growth.

“The BSP has a dual mandate: inflation and economic growth. If the Federal Reserve cuts its rate to support growth and the BSP does not, then there will be questions as the Philippines still faces problems with economic growth,” he said.