Economic team sees prolonged trade war, armed conflict as biggest risks to economy

THE GOVERNMENT has warned that prolonged trade disputes or the outbreak of armed conflict in strategic parts of the world pose big risks to even small trading economies like the Philippines.

“Definitely a lot of the big risks we have are unresolved trade issues, and also quite frankly the threat of armed conflict, these are going to certainly be negative for us unless there is a resolution to these problems,” Finance Secretary Carlos G. Dominguez III said at a news conference Monday accompanying a forum briefing the public on economic aspects of President Rodrigo R. Duterte’s State of the Nation Address (SONA).

Mr. Dominguez was responding to a question on the factors that he expects will influence the government‚ as management of the economy.

Mr. Dominguez said interest rates and the manufacturing industry are two of the areas where the impact of the United States-China trade war is serious.

Nevertheless, Mr. Dominguez said the economy can weather the risks from trade tensions.

“[W]e should be confident that our economy is not a big trading economy, and our growth is going to be dictated by how we spend domestically,” Mr. Dominguez said at the pre-SONA forum.

However, he noted the country is still “not immune” to global events.

Economic analysts have said that the Association of Southeast Asian Nations can benefit in the short term from the trade war, the region being the top relocation site preferred by businesses affected by the trade war.

Trade Secretary Ramon M. Lopez said attracting investors is one opportunity presented by the trade war.

“We really have to catch and absorb all these investments that will be transferring hopefully from China and other affected countries if they have to relocate to the Philippines,” Mr. Lopez said.

Investment from China, for instance, has grown to $200 million from less than $1 million per year. As recently as 2015, the average was about $17 million annually.

“We just have to continue with this. There are a lot of pending projects, manufacturing, energy and infra,” Mr. Lopez added.

Meanwhile, diversifies export markets will also help the Philippines survive the negative impact of the trade war, Mr. Lopez said.

“We’re talking to a lot of markets not only the traditional markets. We are talking to Russia, the Middle East, and to other places where we usually don’t export to in a big way,” Mr. Lopez said, adding that new products, higher value-added and maximizing the preferential tariff schemes granted by the US and the European Union will also help the Philippines offset the negative impact of the trade war. — Janina C. Lim