It would appear that President Trump is a practical person. He’ll probably increase tariffs on countries with immigration issues or countries with high trade deficits
To kick off the World Economic Forum in Davos-Klosters, Switzerland, the Philippine delegation, led by Finance Secretary Ralph G. Recto, convened for a briefing with WEF representatives.
Photograph courtesy of DoF
Finance Secretary Ralph Recto said the economy will sustain strong employment and manageable debt despite Trump’s protectionist and inflationary policies.
Recto shared the outlook in an interview with Bloomberg at the sidelines of the World Economic Forum in Davos-Klosters, Switzerland which runs from January 20 to 21.
Recto said the local economy is seen to grow by at least 6 percent this year as the business process outsourcing (BPO) industry and remittances for overseas Filipinos workers (OFWs) expand.
He said this will further secure US dollars Filipinos back home can exchange for Philippine pesos, boosting domestic consumption of various goods and services.
“We have a thriving BPO industry. The country’s growth is really coming from household consumption which accounts for 65 percent of our economy,” Recto said
Re-elected US President Donald Trump promised to implement anti-immigration policies to spur more jobs to the Americans, and high tariffs on all US imports to boost US firms’ production.
Economists said these policies could increase global prices and slow household consumption as businesses pass their tariff expenses to consumers.
However, Recto said the Philippine market will likely be spared from the worst scenario resulting from Trump’s trade policies.
“It would appear that President Trump is a practical person. He’ll probably increase tariffs on countries with immigration issues or countries with high trade deficits,” he said.
However, Recto said imported goods might push up overall inflation by a relatively minimal degree as the peso might weaken toward P60 per a dollar due to geopolitical tensions under Trump’s leadership.
“The Philippine peso would probably depreciate by 5 percent [compared to Japan’s 12 percent]. The Philippines is in the middle of the pack,” Recto said.
To raise funds up to $3.5 billion for government projects, Recto said the Philippines will be issuing US and Euro bonds in the first half of the year while maintaining a higher or 80 percent share of domestically-sourced or peso-denominated debt.
“We’ve identified eight banks for global bonds, and there’s no plan to increase the amount,” he said.
Recto said the bond proceeds would add to tax revenues, stressing that the Finance Department is pushing the passage of tax reforms before the year ends. Officials propose adjusting taxes on single-use plastics, mining, and motor vehicle use.
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