Golez: This article shows that a good balance in our relations with both the US and China is very important, instead of the apparent pivot to China at the expense of our long established relations with the US indicated by recent bashing of the US:
Philippines among economies ‘highly exposed’ to Trump policies
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Posted on November 14, 2016
PROTECTIONIST policies in the United States under a Trump presidency could weigh on the Philippines’ growth momentum, analysts at Nomura Global Research said in a Nov. 10 report e-mailed to journalists last weekend, citing potential “disruptions” of both external trade and domestic demand.
US President-elect Donald J. Trump gestures during a campaign rally in North Charleston, South Carolina in this Feb. 19 photo. -- AFP
Noting that “the Philippines is one of the most highly exposed economies” in this regard, economists Euben Paracuelles and Lavanya Venkateswaran said in the report that “[i]f US immigration policies are tightened and outsourcing activities are reduced during Trump’s drive to bring jobs back, this could hurt both the Philippines’ current account surplus and domestic demand via lower overseas worker remittances (we estimate 30% of remittances come from the US) and lower FX revenues/employment from the BPO (business process outsourcing) sector, which mostly caters to US corporates.”
The US was the second-biggest destination of outbound Philippine shipments as of end-September, accounting for 15.7% of total merchandise exports worth $6.546 billion, according to data from the Philippine Statistics Authority.
Filipinos working in the US were also the biggest source of cash remittances as of end-August at $5.789 billion, accounting for a third of the $17.642-billion total.
Diwa C. Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas, said it is “too early” to tell if Mr. Trump will actually fulfill his campaign promises, pointing out a starkly different tone the business tycoon took during his victory speech on Wednesday.
At the same time, the Nomura report said President Rodrigo R. Duterte’s tirades against the US could “raise the risk of weaker relations,” especially following his speech in Beijing declaring his “separation” from the US in both “military” and “economic” terms.
That startling announcement was clarified the following day to mean simply a shift in focus towards the rest of Southeast Asia, as well as China, Japan, and South Korea as the government pursues an “independent” foreign policy.
Nomura expects a growth slide of around 0.2 percentage points in 2017 should Mr. Trump carry out protectionist policies promised during the campaign, with stronger fiscal spending and increased trade with China helping the Philippines offset any shift in US trade policy. The research firm expects the Philippine economy to grow 6.3% in 2017, sliding from a 6.7% forecast for this year.
Increased “productive” spending by the national government focused on infrastructure should help support growth, driving a wider fiscal deficit to hit 2.7% of gross domestic product (GDP) in 2017.
“Another possible mitigating factor is stronger economic relations with China owing to President Duterte’s more reconciliatory stance than his predecessor. This could alleviate some of the geopolitical tensions associated with the South China Sea dispute after the Philippines won the International Court of Arbitration ruling [in July],” the economists added.
Across the region, a Trump presidency could lead to weakened business confidence, slower economic growth, pressure on balance of payments that could drive deficits, faster inflation due to supply shocks and even heighten geopolitical tensions.
Still, Nomura economists said the Philippines’ sound fundamentals should lend resilience against both domestic and external shocks that could rattle markets. -- Melissa Luz T. Lopez
The US was the second-biggest destination of outbound Philippine shipments as of end-September, accounting for 15.7% of total merchandise exports worth $6.546 billion, according to data from the Philippine Statistics Authority.
Filipinos working in the US were also the biggest source of cash remittances as of end-August at $5.789 billion, accounting for a third of the $17.642-billion total.
Diwa C. Guinigundo, deputy governor of the Bangko Sentral ng Pilipinas, said it is “too early” to tell if Mr. Trump will actually fulfill his campaign promises, pointing out a starkly different tone the business tycoon took during his victory speech on Wednesday.
At the same time, the Nomura report said President Rodrigo R. Duterte’s tirades against the US could “raise the risk of weaker relations,” especially following his speech in Beijing declaring his “separation” from the US in both “military” and “economic” terms.
That startling announcement was clarified the following day to mean simply a shift in focus towards the rest of Southeast Asia, as well as China, Japan, and South Korea as the government pursues an “independent” foreign policy.
Nomura expects a growth slide of around 0.2 percentage points in 2017 should Mr. Trump carry out protectionist policies promised during the campaign, with stronger fiscal spending and increased trade with China helping the Philippines offset any shift in US trade policy. The research firm expects the Philippine economy to grow 6.3% in 2017, sliding from a 6.7% forecast for this year.
Increased “productive” spending by the national government focused on infrastructure should help support growth, driving a wider fiscal deficit to hit 2.7% of gross domestic product (GDP) in 2017.
“Another possible mitigating factor is stronger economic relations with China owing to President Duterte’s more reconciliatory stance than his predecessor. This could alleviate some of the geopolitical tensions associated with the South China Sea dispute after the Philippines won the International Court of Arbitration ruling [in July],” the economists added.
Across the region, a Trump presidency could lead to weakened business confidence, slower economic growth, pressure on balance of payments that could drive deficits, faster inflation due to supply shocks and even heighten geopolitical tensions.
Still, Nomura economists said the Philippines’ sound fundamentals should lend resilience against both domestic and external shocks that could rattle markets. -- Melissa Luz T. Lopez
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