By LEE C. CHIPONGIAN
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the Philippines will remain one of the “least affected” economy by the renewed escalation of the US-China trade conflict but the government has much to do to prepare to catch the benefits such as trade redirections and relocations.
Although the resumption of trade hostilities is still bad timing with the COVID-19 pandemic, Diokno continued to see a manageable impact of the restarted trade war on local exports, which only has about 0.5 percent exposure to the products hit by higher US tariffs.
“Not surprisingly, the Philippines is expected to be among the least affected by the US-China trade tensions. This supports IMF’s (International Monetary Fund) view that the country’s low participation in global trade as well as in global value chains relative-to-peers seems to explain why the Philippines has not been negatively impacted by the US-China trade war,” said Diokno.
“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 added. “Both events have prompted a re-evaluation across countries of the existing global supply with firms possibly moving toward 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.”
But, he said, the government has to ready itself for these trade redirection and rearrangement of global supplies.