THE PHILIPPINES is among the economies least affected by simmering trade tensions between the United States and China, Moody’s Investors Service said in a March 19 note, citing its relatively low exports to Beijing compared to those of other Asian economies.
In a report, the credit watcher placed the Philippines in the middle of the pack in terms of the impact of the still unresolved tariff wars between the world’s two biggest economies.
Thailand, Vietnam, Taiwan and Malaysia are seen to benefit the most out of the trade war, as they are likely to receive the trade and investment opportunities diverted from China. These four economies scored the highest in terms of export similarity, which means that they can offer roughly the same manufactured goods that are sourced from China.
The Philippines was found better-positioned to benefit than the likes of Sri Lanka, Cambodia and Bangladesh.
“The weakening of export shipments over the past year has been broad-based, reflecting the deteriorating outlook for global growth and, in particular, China,” Moody’s said in its note. “Lower import demand from the region’s largest economy reflects both domestic and external factors, including slower domestic demand as credit availability has tightened and the trade dispute with the US.”
China was the country’s biggest trading partner in 2017, as it is the source of $21.394 billion worth of imports and received $8.699 billion of Philippine goods exports, according to latest full-year trade data of the Philippine Statistics Authority.
In the same note, Moody’s attributed slower capital formation growth in the Philippines and Indonesia to rising interest rates against the backdrop of growing current account deficits and exchange rate volatility.
At the same time, stronger public spending on infrastructure can be expected to “contain further weakening” of investments.
Hong Kong and Mongolia are expected to see the biggest slowdowns in economic growth due to their significant trade exposures to China, alongside Singapore, Vietnam and Taiwan. — Melissa Luz T. Lopez