An economist emphasized that diversifying export markets will enhance the Philippine economy's resilience against protectionist policies, despite its primarily domestic-driven nature.
Leveraging Free Trade Agreements for Growth
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., stated that the Philippines' various free trade agreements, particularly with the Association of Southeast Asian Nations, present significant untapped potential. He highlighted the urgent need to diversify both export markets and products to optimize these agreements.
The Philippines currently maintains FTAs with multiple partners including Australia, New Zealand, Hong Kong, Japan, and South Korea. Trade officials revealed that discussions are underway with Chile, targeting formalization by 2026, and with the European Union among other potential partners.
Strategic Expansion and Economic Protection
Department of Trade and Industry Undersecretary Allan Gepty announced plans to initiate negotiations with Canadian counterparts in the first quarter of 2026, signaling the government's commitment to expanding international trade relationships.
According to Bangko Sentral ng Pilipinas data, exports constituted approximately 28.8% of the country's gross domestic product during the first three quarters of 2025. Ricafort noted that Philippine export volumes remain three to five times smaller than those of neighboring ASEAN countries.
The Philippine economy demonstrates reduced export dependency compared to regional peers, with consumer spending accounting for about 73% of economic activity. This domestic focus provides insulation against external pressures such as higher US tariffs and global trade conflicts.
Diversification Strategy and Investment Appeal
Ricafort identified that the United States represents roughly 17% of Philippine exports, underscoring the importance of expanding to other markets including Asia Pacific, the Middle East, and Europe.
While electronics dominate Philippine exports, the economist stressed the need to increase agricultural product exports. This diversification not only strengthens economic stability but also enhances the country's appeal to foreign investors.
Ricafort confirmed that export market access through FTAs represents a major consideration for foreign direct investment decisions, positioning the Philippines as a more attractive destination for global capital seeking diversified market entry points.
