MANILA, Philippines — The brewing trade war between China and the US could indirectly impact the Philippines’ economy as it poses a threat to the country’s export sector, the government’s economic managers said last Friday.
In an interview, Socioeconomic Planning Secretary Ernesto Pernia said a possible trade war between two economic powerhouses may dampen global economic growth, therefore diminishing the import capacity of the Philippines’ trade partners.
“In the Philippines, there’s no (direct) impact. We are not exporting aluminum or iron or steel. So the impact would be indirect,” Pernia said on the sidelines of the Philippine Economic Briefing in Clark, Pampanga.
“If it’s a full blown trade war between two superpowers, it’s going to diminish the global economic growth, meaning our exports market will be less inclined to import our products. It will hurt their importing capacity,” he said.
Finance Secretary Carlos Dominguez also expressed concern amid the developments in the US and China.
He warned there would be no winners in any trade war, and that it could affect all countries in the world, including the Philippines.
However, the finance chief said the country may be more cushioned against adverse impacts as the local economy is not as reliant to exports and imports.
“We are growing our market locally so we are very robust. We don’t rely on exports or imports as much as other economies so we are sort of insulated,” he said.
However, Dominguez is not downplaying the effects on the local economy, as the world has yet to see how the situation between the US and China would unfold.
“I’m not going to say (the impact is minimal). We don’t know what will happen. So far they are positioning themselves, so we don’t know exactly how it will (go),” he said.
To help minimize a possible trade war’s effect on the Philippines, Dominguez said the government is investing domestically and focusing on its Southeast Asian neighbors.
For his part, Pernia expressed optimism the administration of President Donald Trump would still change its stance.
“It’s likely that President Trump will come to his better senses because Republicans are for free trade so...they are telling him that it’s not a good policy and it’s going to hurt the American industries and consumers if there’s a trade war. And China, being the manufacturing machine of the world, will have more clout in trade,” Pernia said.
Meanwhile, Dominguez said the government would consider entering the Trans Pacific Partnership (TPP) should the US decide to join the trade pact.
“We will certainly consider it. Let us see what would happen, but there is also RCEP (Regional Comprehensive Economic Partnership). I hope cooler heads will prevail in the end,” he said.
The TPP is a free trade agreement aimed to liberalize trade and investment within the Asia-Pacific region. However, Trump earlier backed out from the deal.
The RCEP, meanwhile, centers on the member-states of the Association of Southeast Asian Nations and its six trading partners.