Credit rating agency Moody’s Investors Service has warned the Philippines anew of the negative impact from a possible shift in United States’ economic policies.
The Philippines is one of the countries in the Asia-Pacific region that will suffer the consequences of a change in US trade policies, Moody’s said in a report released Thursday.
“While the nature of policies under the next US administration is uncertain, President-elect Donald Trump’s campaign proposals indicate that a shift involving lower US imports and foreign direct investment (FDI), and curbs to immigration is possible,” it stated.
Since the global financial crisis, trade has remained notably muted, the debt watcher noted.
A global retrenchment by the world’s largest economy would exacerbate the situation, challenging output growth and potentially constraining policy space in trade-reliant, FDI-supported or remittance-dependent countries, it said.
“In this report, we discuss which sovereigns in the Americas and Asia Pacific would be most vulnerable to more inwardly focused policies in the US, through the relevant transmission channels,” it added.
“India (Baa3 positive) and the Philippines (Baa2 stable) could also suffer in the event of policies that disincentivized foreign sourcing of business services,” it said.
Earlier, Moody’s said a possible shift in the US immigration policy under the Trump presidency spells credit negative for the Philippines because of its reliance on money transfers by overseas Filipinos.
“A policy shift that would disrupt immigration into the US would be credit negative for countries more highly dependent on remittance flows, including El Salvador (B3 negative), the Philippines and Vietnam,” Moody’s noted.
Moody’s has given the Philippines a credit rating of Baa2—a notch above the minimum investment grade. The rating carries a stable outlook, indicating it is unlikely to change in the near term.
An investment grade rating indicates a government’s ability to pay debts falling due, given generally healthy economic and political conditions of the country.