BSP chief: Sustained reforms to shield PH from global economic turmoil
The effects of the protracted trade tensions between the United States and China on the Philippine economy will be minimal, but crucial reforms are needed if the country is to remain insulated from global market uncertainties.
Thus said Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno on Thursday as he made a fresh pitch for a sustained push in the infrastructure sector and a host of other policy recommendations in the Duterte administration’s economic program.
“Amid uncertain external environment, it is imperative for the government to sustain the reforms that form the backbone of long-term sustainable development,” he said at a press briefing.
Diokno said experts’ assessment indicated the Philippines would not be as adversely affected as other countries, since its export exposure to products targeted directly by US tariff against China was less than one percent of gross domestic product. In addition, the country has low participation in the global trade and in the global value chain in comparison to other Asean countries.
Nonetheless, he stressed reforms were crucial to shield the local economy from unexpected international developments going forward.
These include investing heavily in high quality infrastructure, developing human capital, improving labor productivity, creating a favorable business environment and fostering an integrated trade and investment policy.
“The full implementation of the country’s export strategy and policies in the Philippine Development Plan and Philippine Export Development Plan should be relentlessly pursued,” said the central bank chief, who is also a key member of the administration’s economic team.
Diokno explained the January 2020 phase one deal between the United States and China has dampened fears of further trade conflict escalation and related short-run negative consequences to global growth.
“The deal could have far-reaching implications on the future of the global trading system,” the BSP chief said. “It could potentially distort the flows of global trade and investment and consequently, weaken global growth in the long run. Tariffs remain elevated.”
However, even in the context of retaliatory tariff increases between the United States and China, the country’s exports have remained broadly stable.
Diokno said that, based on Philippine Statistics Authority data, electronics exports, which are linked to global productive networks and make up 50-60 percent of the Philippines’ total goods exports, continued to register decent performance.
Exports of goods in December 2019 grew robustly at 21.4 percent.