Diokno: US-China trade war to benefit PH

THE Philippine economy is likely to benefit from the renewed escalation of the United StatesChina trade war in the long run, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said.

In a message to reporters over the weekend, he acknowledged the US and China are the Philippines’ major trade partners as the two economies accounts for more 25 percent of total exports and imports since last year, mainly electronics and machinery.

Diokno added “even in the context of retaliatory tariffs between US and China, the country’s exports have remained broadly stable.”

Citing Philippine Statistics Authority data, he emphasized that electronics exports, which make up more than half of the Philippines’ goods exports, continued to perform well in 2019, notwithstanding its link with global production networks.

The central bank chief said this phenomenon can be attributed to the Philippines’ low exposure — estimated at 0.5 percent — to products targeted directly by US tariff actions against China.

“Not surprisingly, the Philippines is expected to be among the least affected by the US-China trade tensions,” he added.

Diokno also highlighted that this expectation supports the International Monetary Fund’s view that the Philippines’ low participation in global trade as well as in global value chains relative to peers seems to explain why it has not been negatively impacted by the US-China trade war.

“In the long run, the escalation of the US-China trade war and the coronavirus pandemic could have a positive impact on the Philippine economy,” he further said.

The BSP head added both events have prompted a re- evaluation across countries of the existing global supply with firms, possibly moving towards reducing dependence on any single country.

“This current wave of revamping of global supply chains opens a window of opportunity for the Philippines to benefit from trade redirection and relocation of production sites,” he noted.

While the country has been recognized as one of the top investment destinations post-coronavirus disease 2019 pandemic, Diokno pointed out that the government and private sector have to unceasingly do more to further boost the country’s attractiveness to foreign investors.