Davao City: The National Economic and Development Authority (NEDA) said a Donald Trump victory in the United States elections could affect the Philippine economy, particularly in terms of trade, investment and remittances.
Socioeconomic Planning Secretary Ernesto Pernia said he prefers a victory for Democratic candidate Hillary Clinton rather than Republican bet Trump.
“I think Clinton is better. Well, more continuity of [the outgoing regime of President Barrack]Obama,” he told reporters on the sidelines of the Philippines Development Forum here Tuesday.
Unlike a possible policy continuity under Clinton, Trump’s government would be protectionist and tend to transform the US into an inward-looking economy, Pernia said.
“There will be impact on trade, investment . . . [remittances],” he said without elaborating.
An economist from London-based research consultancy Capital Economics said the Philippines, along with Taiwan and Korea, will stand out as the Asian countries with more to lose in the event Trump is elected as the next US president.
“Given the uncertainty over what a Trump victory would mean for US policy towards the region, we suspect that financial markets in Emerging Asia would experience some short-term volatility if he were elected president,” economist Gareth Leather said in a report.
Leather said it is worth assessing what the impact of a sharp turn toward more protectionist policies in the US would mean for the region.
“The Philippines would be the biggest loser if Trump followed through on his threat to punish American companies that outsource jobs abroad,” he said, noting the Philippines has a thriving business process outsourcing (BPO) sector.
Last year, the BPO sector accounted for around 10 percent of the country’s gross domestic product (GDP).
The Philippines would also lose if Trump pushes ahead with the plan to ban immigrants from part of the world where there is a proven history of terrorism against the US or its allies.
In terms of remittances, Filipino workers in the US transfer the equivalent of about 3 percent of the Philippine GDP.
Leather said the most likely scenario is that Trump would use the threat of tariffs as leverage in trade negotiations.
Trump’s headline-grabbing proposal was a 45-percent tariff on all US imports from China.
“For some sectors such as steel and tires, which have been the focus of US anger towards China in recent years, a blanket 45 percent tariff would make little difference since the US already imposes tariffs on Chinese imports of these products that are typically well in excess of 45 percent,” Leather said.
The economist explained a 45 percent across-the-board tariff would in principle make more of a difference to China’s electronics sector, which accounts for around 50 percent of total Chinese exports to the US.
If the tariff leads to a sharp fall in US imports from China, it would have knock-on effects for Asian countries that export a lot of intermediate goods to China, which are then assembled before getting shipped to a final destination.
“To the degree that other countries can step in, Asian exporters are well-placed to benefit from any shift in US demand. For instance, after China, Korea, Vietnam, Taiwan and Malaysia are the next four biggest suppliers of mobile phones to the US,” Leather said.
“Even a relatively small drop in China’s overall market share could make a big difference to smaller economies in the region (unless tariffs are eventually expanded to cover other economies),” he pointed out.
In January to August 2016, the Philippines’ balance of trade with China stood at a $5.911-billion deficit, while it registered a trade surplus of $1.219 billion with the US.
In terms of foreign direct investment, net inflows in January to July came from the US reached $78.28 million, while $3.30 million came from China.