If the country avoids higher Trump tariffs on goods imported to the United States, the economy could grow by 6.3 percent this year and next, the second fastest in the ASEAN+3 region.

The ASEAN+3 Macroeconomic Research Office (AMRO) shared this outlook, citing the country’s robust household consumption, low inflation, and huge services sector.

Vietnam’s economy is expected to grow the fastest, at 6.5 percent this year, while Cambodia will likely place third, with 5.8 percent, compared to the rest of the ASEAN+3 region, which consists of Southeast Asia, China, Japan and Korea.

“The strength of the Philippines is the services industry and the business process outsourcing (BPO) and knowledge sectors,” AMRO chief economist Hoe Ee Khor said.

The services sector accounted for 62 percent of the country’s total employment in February, which improved to 49.15 million workers from 48.49 million in January.

The BPO industry employed over 1.8 million people, contributing $38 billion in revenues last year, or 7 percent growth compared to 2023.

This pace was faster than the 3.9 percent revenue growth in exported goods in February this year compared to the same month in the previous year.

Global risks

AMRO also expects resilient household consumption backed by projected inflation of 3.3 percent this year and 3.2 percent in 2026.

The research organization said the relatively low inflation will be driven by stable supply of goods and effective monetary policy by the Bangko Sentral ng Pilipinas.

Government officials said these factors led to the 1.8 percent inflation in March, the lowest since the pandemic.

However, AMRO said the economy could grow “slightly” below 6 percent this year if Trump pursues high tariffs on imports to the US.

“The economy could be challenged by a sharp slowdown in major trading partners, through their impacts on merchandise and services trade, tourist arrivals, overseas remittances, and foreign investment inflows,” AMRO said in its outlook report.

AMRO Group head and principal economist Allen Ng said the government must fast-track infrastructure, manufacturing and human-capital projects to prevent massive economic losses.

“There are a lot of changes in technology. How can you upgrade the services and agriculture sectors to create more value-added skills and higher-paying jobs?” he said.

“We must diversify as much as possible, move in terms of markets, but also move to new industries. If shifts in global trade are a permanent shock, others might not survive,” Khor added.

If the government successfully improves those economic areas, Ng said the Philippine economy could grow by over 5 percent from 3.2 percent by 2040.