UBS: Expect PH economy to lose steam as global trade war picks up
UBS Securities Pte. Ltd. lowered its growth forecast for the Philippine economy next year to 6.4 percent, citing the impact of the ongoing global trade tensions.
In a teleconference on Wednesday, UBS associate economist Alice Fulwood said they had revised the earlier 6.6-percent forecast as a consequence of the downgrading of the G-3 economy, referring to the United States, China and Europe.
Still, UBS kept the same forecast for this year, expecting a 6.8-percent growth in the Philippine gross domestic product. The impact of the trade tensions in larger economies is expected to be felt sometime in the fourth quarter.
“The revision we put through is a direct result of our work estimating the impact of the trade war. We have 20 basis points off the Philippines, which is actually one of the smaller downgrades,” Fulwood said.
The three powerhouses account for most of the global economy.
The country is considered a closed economy, or less dependent on trade. Yet, the Philippines is “less exposed, but it’s still not completely unexposed,” she said.
“The Philippines tends to do well when the rest of the world does well. We do take an average of 35 basis points off the growth in the G3 economy,” she said.
Bigger changes were made in the GDP forecasts for other markets in Southeast Asia, she said, citing the case of Singapore, which had the largest revision after UBS removed one percentage point off its growth.
In a report sent to the media yesterday, UBS said it was expecting $200 billion worth of US imports from China to be levied in September, with the impact on the US and Chinese economies likely to happen this fourth quarter.
The report said economies in the Association of Southeast Asian Nations (Asean) “will most likely” feel this trade tightening late this year, or early 2019.
“The impact on the Philippines is relatively low. So if you get a slight slowdown in the [fourth quarter] as a result of the trade war, that won’t necessarily impact the 2018 [GDP] number much, but it will impact the 2019 [GDP] number which is why we forecast [it downwards],” she said.
