THE Philippine economy stands to gain $42.2 million annually from the ongoing trade war between the United States and China between 2018 and 2022, according to the National Economic and Development Authority (Neda).
In a recent forum, Socioeconomic Planning Secretary Ernesto M. Pernia said the indicative figure is based on the Neda’s initial simulation of the impact of the trade war.
Pernia said the analysis resulted in a net positive welfare effect on the Philippines worth $34.7 million in 2018 and as much as $50.7 million by 2022 or 2023.
“It’s [trade war] actually going to result in a net positive welfare effect on the Philippines; that is because our main exports to the US comprise electronic equipment and transport equipment, as well as other nonagricultural products, chemical and rubber products, and ferrous metals, and mineral products as inputs to their production,” Pernia said.
Pernia explained that with the trade war, China and the US both need another source of electronic products and transport equipment, and these can be exported to them by the Philippines.
He said, however, the Neda simulation only took into consideration the country’s exports to the US. If China’s needs will be taken into consideration, it may lead to higher gains.
“I think we’re competitive [in terms of cost]. Maybe, even if we’re a bit more expensive, because the source in China is not available, they have to get more from the Philippines,” Pernia said.
However, Finance Secretary Carlos G. Dominguez III said the trade war is not all good news, given that it introduces uncertainty not only in the international market but in
domestic markets, as well.
Dominguez said the recent announcement of US President Donald Trump that around $200 million worth of goods will be subjected to tariffs adds to the uncertainty being experienced by the global economy.
To address the ill effects of this uncertainty in domestic markets, Dominguez said banks increase interest rates, which, however, weakens the Philippine peso further.
“When you have a trade war, at lot of uncertainty is introduced into the world economic system, and banks react to that increased uncertainty by increasing interest rates, so that’s happening. So that has further eroded the value of our peso,” Dominguez said.