Filipinos struggling on meager income

IBON Foundation said that involuntary hunger doubled under the administration of President Ferdinand Marcos Jr.

In a statement, IBON said the administration failed to ensure higher wages and low prices.

"The rise in hunger is a wake-up call that many Filipinos are struggling on meager incomes and the high cost of living. This shows government's rhetoric of economic gains and a robust jobs market is empty — just like the bellies of millions of hungry Filipinos," the group said.

Citing figures from a Social Weather Stations (SWS) survey, the number of Filipinos experiencing involuntary hunger more than doubled since the start of the Marcos administration, from 11.6 percent or 2.9 million families in June 2022 to 27.2 percent or 7.5 million families in March of this year.

IBON said the average daily minimum wage of P469 falls way below the P1,227 family living wage needed by a family of five, as of February this year.

"An indirect indicator of low incomes is the number of households without savings in any form increasing to 20.1 million, or 74 percent of the total, in the fourth quarter of 2024, based on Bangko Sentral ng Pilipinas (BSP) data.

Meanwhile, the overall price level of food has increased by 16 percent between June 2022 and February 2025, according to inflation data from the Philippine Statistics Authority," it said in a statement.

The group said that "persistent low incomes and high prices" are also behind the rise in hunger.

Source: Business World

Infrastructure spending declines in December

Infrastructure spending slumped by nearly 20% in December, but still exceeded the full-year program, the Department of Budget and Management (DBM) said.

Latest data from the DBM showed that spending on infrastructure and other capital outlays fell by 19.8% or P36.3 billion to P146.7 billion in December 2024 from P183 billion in the same month in 2023.

“This was attributed to the combined impact of the base effects of high capital disbursements in 2023, as well as the ongoing processing and release of cash allocations for payments of completed and ongoing capital outlay projects of various departments/agencies during the latter part of 2024,” the DBM said.

For the full-year, expenditures on infrastructure and other capital outlays jumped by 10.1% to P1.33 trillion from P1.2 trillion in 2023. This also exceeded the P1.24-trillion program by 6.7%.

The DBM attributed the faster infrastructure spending to the implementation of the Department of Public Works and Highways’ (DPWH) banner infrastructure projects as well as defense modernization projects of the Department of National Defense.

DBM data showed overall infrastructure disbursements rose by 8.9% to P1.545 trillion in 2024 from P1.42 trillion in 2023. It exceeded the P1.473-trillion program for 2024 by 4.9%.

“This was equivalent to 5.8% of GDP, well within the 5-6% target for 2024 and sustaining the 5.8% outturn in 2023,” the department said.

Infrastructure disbursements also include infrastructure components of subsidy and equity to government-owned and -controlled corporations and transfers to local government units.

“This was credited mainly to the accelerated infrastructure spending of the DPWH for its accelerated implementation of construction activities, particularly from carry-over or previous years’ projects, progress billings from completed ongoing infrastructure projects, as well as the direct payments made by development partners for foreign-assisted rail projects of the Department of Transportation,” the DBM said.

Oikonomia Advisory and Research, Inc. Economist Reinielle Matt M. Erece said the P122.2-billion increase in infrastructure and capital outlays in 2024 was partly driven by defense modernization programs of the government.

“This can be in response to the heightened geopolitical tensions felt by a lot of countries,” he said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said faster infrastructure spending last year can be partly attributed to preparations for the May elections.

“(This is) part of the preparations for the midterm elections, as basis for accomplishments that are consideration for the voters to choose some candidates based on their completed projects and programs,” he said.

Mr. Ricafort said the government likely expedited infrastructure projects in the first three months of 2025 ahead of the election ban.

The Commission on Elections’ ban on public works spending began on March 28 and will run for 45 days. The midterm elections are scheduled for May 12.

Mr. Erece said he expects slower infrastructure spending as the government “reviewed and removed some of the unprogrammed appropriations and other expenses that the administration felt were unneeded, at least in the short term.”

Source: Business World

US slaps higher tariff on Philippines

US president Donald J. Trump is imposing a bigger-than-expected tariff on Philippine exports to the United States, as part of a broader reciprocal tariff plan that will apply to all its trading partners.

However, Philippine government officials downplayed its impact, saying this was still lower than tariffs imposed on the rest of Southeast Asia.

Finance Secretary Ralph G. Recto said on Thursday that the Philippine economy, which is mainly driven by domestic demand, is “relatively resilient” against trade wars.

“However, as with all countries, we are not spared from the impact of the expected decline in international trade and possible slowdown of global growth due to supply-chain disruptions, higher interest rates, and higher inflation,” Mr. Recto said in a statement.

Trade Secretary Cristina A. Roque said the reciprocal tariffs can provide opportunities for the Philippines as regional competitors will be subjected to higher tariffs.

“We view with guarded optimism that the recent US imposition of reciprocal tariffs will provide strategic opportunities for the Philippines to improve its economic relationship with the US,” she said in a statement.

Ms. Roque said she will request a meeting with her US counterpart to discuss “strengthening” trade relations between the two countries.

On Wednesday, Mr. Trump announced a 10% tariff on all its trading partners, which will take effect on April 5.

The US will also slap individualized higher reciprocal tariffs on major trading partners including the European Union, China, Japan, South Korea and the Philippines, starting April 9.

“Foreign nations will finally be asked to pay for the privilege of access to our market — the biggest market in the world,” Mr. Trump said.

According to an infographic posted by the White House on X, the Philippines will be slapped with a 17% “discounted reciprocal tariff” as the Philippines charges a 34% tariff on the US.

However, an annex document to the executive order on reciprocal tariffs showed the adjusted reciprocal tariff for the Philippines is at 18%.

It was not immediately clear why there was a discrepancy in the tariff rates in the infographic posted on X and the annex document posted on The White House website.

Nonetheless, Philippine officials cited the 17% tariff rate in their press statements.

Among Southeast Asian countries, Cambodia faces the steepest tariff at 49%, followed by Laos (48%), Vietnam (46%), Myanmar (45%), Thailand (37%), Indonesia (32%), Malaysia (24%) and Brunei (24%). Singapore will be imposed a baseline tariff of 10%.

“The imposition of the 17% tariff, which is the second lowest, is not so bad in our opinion. We still see it as somewhat favorable,” Presidential Communications Office Undersecretary Clarissa A. Castro said at a Palace briefing in mixed English and Filipino.

Agriculture Secretary Francisco P. Tiu Laurel, Jr. said the Philippines could take advantage of the relatively lower tariff rate compared with its neighbors to “push for more sales to the US of our products.”

“The new tariffs also put the Philippines in a more advantageous position, more specifically for certain export products like coconuts. With lower tariffs than Thailand, Philippine coconut exports can be more competitive,” Ms. Roque said.

Ms. Roque noted that there are Philippine products that will be exempted from reciprocal tariffs, including copper ores and concentrates and integrated circuits.

According to a White House fact sheet, the reciprocal tariffs will not apply to certain goods, such as semiconductors, copper, pharmaceuticals, gold, and “certain minerals that are not available in the US.”

However, agri-based products, particularly food exports, are not exempted from reciprocal tariffs.

“The recent US measure has made US imports more expensive so that their domestic manufacturers can compete. Equally important for the US is to improve its access to rapidly growing economies such as the Philippines,” Ms. Roque said.

“In this regard, the Philippines aims to actively engage the US in a discussion to facilitate enhanced market access for its key export interests, such as automobiles, dairy products, frozen meat, and soybeans, within the framework of a bilateral free trade agreement.”

Special Assistant to the President for Investment and Economic Affairs Frederick D. Go said some investors may relocate and set up manufacturing facilities in the Philippines, given the relatively lower tariffs on Philippine exports to the US.

Trade Undersecretary Allan B. Gepty said it is important to maintain “good relations” with the US. “It would be good to see how we can seize opportunities from the possible trade diversion and recalibration of some investments in the region,” he said.

‘GAME CHANGER’

Fitch Ratings Head of US Economic Research Olu Sonola said Mr. Trump’s aggressive tariffs are a “game changer, not only for the US economy but for the global economy.”

“Many countries will likely end up in a recession. You can throw most forecasts out the door, if this tariff rate stays on for an extended period of time,” Mr. Sonola said.

Higher tariffs may also drive up prices and hurt demand for Philippine-made goods in the US.

“The US is the biggest export market of the Philippines, so this will have a drag on Philippine growth,” former commissioner of the Philippines Tariff Commission George N. Manzano said in a Viber message.

In 2024, the US was the top destination for Philippine exports, accounting for 17% of the total.

“US importers will put on all these additional tariffs to the selling price in the US,” Foreign Buyers Association of the Philippines  President Robert M. Young said.

“The end result of this is that the Philippines will have difficulties in getting export orders due to lesser or no demand,” he added.

Asked if the Philippines could benefit from the higher tariffs imposed on other countries, Mr. Young pointed out that Philippines has higher costs.

“To start with, the Philippines was selling at a higher price than Vietnam, India, and Cambodia. Meaning, Philippine goods will be the last to be picked up from the shelves,” he said. “Also, Vietnam acted swiftly by reducing their tariff on US goods coming into Vietnam.”

The Philippines exported $12.14 billion worth of commodities to the US in 2024. Of the total, 53% or $6.43 billion were electronic products.

“Electronics and semiconductors, which comprise the bulk of Philippine exports to the US will be vulnerable. Apparel, footwear, and textile products, which rely on preferential trade agreements, may also face competitiveness issues,” Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said.

“Agricultural exports, such as coconut oil, processed fruits, and seafood, could see a decline in demand due to price sensitivity in the US market,” Mr. Rivera said.

Mr. Rivera noted the direct impact on Philippine gross domestic product (GDP) may not be “immediately severe.”

“It’s a prolonged tariff war could dampen investment sentiment and export growth. If businesses pass on higher costs to consumers, inflation may spike,” he said.

The Development Budget Coordination Committee is targeting 6-8% GDP growth this year. It is also projecting 6% and 5% growth in exports and imports, respectively, this year.

In a report, ANZ Research said it estimated that the reciprocal tariffs could have a “milder impact” on the Philippines, along with Indonesia and India, due to their lower reliance on exports.

“Our understanding is that these tariffs are not final and can be negotiated lower, depending on the extent of reduction in the bilateral trade surplus with the US,” ANZ said.

Data from the Office of the US Trade Representative showed that bilateral trade between the Philippines and the US reached $23.5 billion in 2024 — comprising $9.3 billion in US exports and $14.2 billion in imports.

The US goods trade deficit with the Philippines was $4.9 billion in 2024, up 21.8% from last year.

To mitigate the negative effects of the tariffs, Mr. Young said that “there should be a joint best effort from the Philippine government and private sector to turn their heads to other potential export markets.”

Department of Trade and Industry-Export Marketing Bureau Director Bianca Pearl R. Sykimte said that the department is already looking at new export markets such as in the Middle East and Africa.

Confederation of Wearables Exporters of the Philippines Executive Director Ma. Teresita Jocson-Agoncillo said that the reciprocal tariffs will be imposed on top of the most favored nation (MFN) apparel rates.

“It’s better for us to wait for the US side to publish guidelines. As it looks the reciprocal tariff will be MFN rates plus 17%,” she said in a Viber message. “There is still an advantage, as the Philippines has the lowest (tariff) now, against ASEAN (Association of Southeast Asian Nations) counterparts but note that in the end it can still impact global sourcing and supply chain movement.”

Source: Business World