MONEY from Filipinos working abroad and in the business process outsourcing (BPO) sector have relatively steeled the Philippines from the fallout of a tariff tiff launched by Washington, a central bank official said.
Noting that the country’s structure is ‘very different from other countries,’ Bangko Sentral ng Pilipinas Deputy Governor Zeno Ronald R. Abenoja revealed during a forum co-organized with the Asian Development Bank (ADB) that the combined value of the Philippines’s exports and imports is ‘less than 50 percent’ of gross domestic product (GDP).
Current account deficits in the Philippines are largely investment-driven, Abenoja said.
‘It’s not immediately obvious that it’s a bad deficit because it’s being driven by investments, which will increase efficiency and potential output moving forward,’ he explained.
Abenoja emphasized the economy’s resilience is ensured by major components other than trade.
Speaking at the BSP-ADB Association of Southeast Asian Nations (Asean) Economic Outlook webinar, he said remittances from overseas Filipino workers continue to provide a stabilizing force, sustaining household consumption even amid international turbulence.
‘The altruistic nature of remittances has provided resiliency over the global business cycle,’ Abenoja said.
Meanwhile, he said the BPO sector remains a key driver of employment and revenue growth.
This sector’s role could last as BPO firms are adapting to technological shifts such as artificial intelligence (AI) to ensure sustainability, he added.
‘The BPO sector is transforming to adopt AI, ensuring medium-term revenue and employment growth of up to 5 percent annually,’ he said.
Myriad of drivers
Tourism revenues also help absorb external shocks, as demand from both domestic and international travelers continues to support service-oriented industries, Abenoja added.
According to the ‘2025 Economic Impact Research’ forecast of the World Travel and Tourism Council (WTTC), the sector will contribute P5.9 trillion to the Philippines economy this year: 13.5 percent above 2019 and ‘a new all-time high.’
The WTTC added that ‘this new record’ would represent more than a fifth (21 percent) of GDP, cementing travel and tourism’s place as ‘a backbone of the Philippine economy.’
Meanwhile, Indonesia pointed to domestic reforms, capital mobilization and human capital development to maintain its near-5 percent growth.
According to ADB principal country economist Reza Anglingkusumo, Jakarta ‘is mobilizing domestic savings into manufacturing and high-value services to sustain middle-class growth and create decent jobs.’
Singapore’s whole-of-nation approach, meanwhile, ensures private-sector participation steels the Philippines’s neighbor, according to AMRO Deputy Group Head Laura Britt-Fermo.
Initiatives such as the Johor-Singapore Special Economic Zone demonstrate the importance of coordinated infrastructure and labor planning, Fermo said, ensuring smooth flows of goods and skilled personnel.
Jolted by tariffs
Abenoja’s statements were issued as the region grapples with the effect of a tariff tiff that Donald Trump imposed in the first week of coming into office as the 47th president of the world’s largest economy.
The central bank is monitoring potential spillover effects from shifting US tariff policies and global trade tensions, he said, noting that external developments may influence the Philippines’s growth outlook over the next few quarters.
Still, Roland Rajah of the Australian think-tank Lowy Institute noted the region is still able to run on trade and foreign direct investment, and that remains largely intact despite global uncertainties.
‘China’s exports to the United States have collapsed by 35 percent to 50 percent, whereas Asean’s exports have boomed,’ Rajah said.
Nonetheless, ADB Cambodia economist Milan Thomas said his office’s modeling indicates that the Philippines is among the least-affected Asean economies under US tariff scenarios. The country’s aegis, Thomas added, is its service-oriented economy and lower exposure to US demand.
Tariff impacts vary across member countries, with Vietnam facing higher exposure due to competition in machinery and electronics, while the Philippines benefits from a large service sector, he said.
‘Most Asean countries would see a net GDP change between a 1 percent gain and a 1 percent loss, depending on trade composition,’ Thomas added.