The Philippines is bracing for the indirect, spillover impacts of economic sanctions slapped on Russia following its invasion of Ukraine, President Duterte’s chief economic manager said.
Finance Secretary Carlos Dominguez III told Bloomberg last Wednesday that given the Philippines’ limited trade with both Russia and Ukraine, the financial and trade sanctions slapped on Russia by Western countries would have no direct impact on the domestic economy.
“But we are quite concerned about the effects on the overall world economy,” Dominguez said. “We are concerned that there might be an effect on the vigorousness of the economies in western Europe and the United States, who are our trading partners.”
Dominguez was worried that global trade disruptions affecting logistics and ease of doing business across borders, which started due to the COVID-19 pandemic, will be prolonged by the Russia-Ukraine war. “It’s like a ricocheting bullet—sometimes we get hit,” he said.
In a report on Thursday, the World Bank’s Philippine office said that “the Russia-Ukraine war rattled investor sentiment, leading to a weakening of the local stock market and the Philippine peso … Market sentiment on the local exchange tanked with heightened uncertainty and anticipated inflationary pressure, caused by the Russia-Ukraine war.”
The World Bank said Philippine authorities should watch out for the extent that the Russia-Ukraine conflict will contribute to a further increase in energy and food inflation.
Dominguez said domestic inflation would likely be “a bit higher” due to high global commodity and food prices “but we are ready to tackle it” by giving away cash subsidies to vulnerable sectors as well as lowering tariffs on some food imports while thumbing down proposals to suspend oil excise taxes.