More U.S. investments, remittances seen with Harris victory
‘A Harris presidency is expected to maintain a more stable economic policy, similar to the current administration. This could lead to a more predictable interest rate environment, with the US Federal Reserve potentially continuing its rate-cutting cycle’
President Ferdinand R. Marcos Jr. with US Vice President Kamala Harris at the margins of the Asia Pacific Economic Cooperation Leaders’ Meeting in San Francisco, USA, on 16 November 2023. In that meeting, President Marcos said their discussion centered on the situation in the West Philippine Sea, even as the US Vice President conveyed the US government’s commitment of support based on the Mutual Defense Treaty forged between the Philippines and the US in 1951.
photograph courtesy of Presidential Communications Office
More investments to the Philippines and remittances from overseas Filipinos in the US are seen under a Harris administration which will likely encourage easing Federal Reserve rates, multi-awarded financial markets analyst and Reyes Tacandong & Co. senior adviser Jonathan Ravelas told Daily Tribune.
Less than two weeks before the 5 November US elections, Democratic Party’s US presidential candidate Kamala Harris continued to surpass Republican Party’s bet and former President Donald Trump by just a percentage point in the election surveys, ABC News reported yesterday.
Harris garnered 48 percent over Trump’s 47 percent, showing the former’s higher popularity among voters.
Ravelas said a final victory for Harris signals a better Philippine economy as her political and economic principles will ultimately bring lower and stable interest rates.
“A Harris presidency is expected to maintain a more stable economic policy, similar to the current administration. This could lead to a more predictable interest rate environment, with the US Federal Reserve potentially continuing its rate-cutting cycle,” he said in a text message.
Analysts see a total reduction of 200 to 250 basis points in the Federal Reserve’s rate from this year until 2026.
Lower policy rates from the US central bank mean low inflation rates, translating to more funds for investors and overseas Filipino workers in the US, the biggest source of remittances to households back home.
“A Trump presidency could lead to higher interest rates in the US due to potential inflationary pressures from increased fiscal spending and tariffs,” Ravelas said.
Unlike Harris, Trump promises to impose high tariffs on goods entering the US at 10 to 20 percent and up to 60 percent on Chinese goods.
Seen as a trade protectionist, Trump argues the restrictive tariffs will force American firms to boost production and hire more local workers.
Possibly higher interest rates under Trump’s leadership could bring most foreign direct investments toward the US financial markets, Ravelas said.
“The Philippine peso could depreciate against the US dollar if US interest rates rise, as investors might prefer the higher returns in the US,” he said.
Ravelas said Harris will likely continue President Joe Biden’s friendly investment approach to the Philippines in securing inclusive economic growth.
“The Philippine economy could benefit from policy continuity under Harris. Her administration is likely to focus on strengthening economic ties and maintaining stable trade relations, which could support Philippine exports and the business process outsourcing sector,” he said.
To recall, in May 2023 for instance, the White House had said Biden and President Ferdinand Marcos Jr. are looking forward to boosting trade through the US-Philippines Trade and Investment Framework Agreement, and collaborations on clean energy.