A full-blown trade war between United States and China will have no direct impact on the Philippines but the country will still not be spared from the fallout, economic managers said.
Finance Secretary Carlos Dominguez 3rd said that while the Philippines was “sort of insulated” against the impact of a full-blown trade war, the government remained concerned of the global consequences.
“First of all, we are growing our market locally so we are very robust,” he told reporters.
“We don’t rely on exports or imports as much as other economies so we are sort of insulated but still I’m not downplaying [the outcome]if there is a full blown trade war. Everybody is going to be affected.”
Washington and Beijing have been engaged in tit-for-tat tariff exchanges after US President Donald Trump last month imposed steep duties on steel and aluminum imports. The back and forth have taken a toll on financial markets and the final economic impact has yet to be known.
“We don’t know what will happen. You know, quite frankly no one [has]won in a trade war. So if the two markets get hurt — China and the US — we will also get hurt. I’m really concerned,” Dominguez said.
To prepare the country against a trade war, the Finance chief said the government was investing domestically and regionally. He also called for a focus on the Association of Southeast Asian Nations as the region is expected to become a major drive of the world economy.
Socioeconomic Planning Secretary Ernesto Pernia, meanwhile, said a trade war would particularly affect raw material imports.
“The impact would be indirect because a trade war, specially if its a full-blown trade war between two super powers, is going to diminish the global economic growth, meaning our exports market will be less inclined to import,” he said in a separate interview.
What could have a more immediate impact, meanwhile, is if Trump follows through on a campaign promise to bring home jobs outsourced by American firms.
London-based consultancy Capital Economics has said that the Philippines could end up as a “biggest loser” if the US adopts an even more protectionist stance.
The business process outsourcing sector is a main driver of the Philippine economy, last year contributing revenues equivalent to about 10 percent of gross domestic product.