By Joann Villanueva
MANILA – The Philippines will have a lesser hit from the Trump administration’s new tariff policies compared to other countries because of its service-oriented economy, an economist said Tuesday.
“Because of that, I think, the tariff impact on the Philippines will be much lower. But I know you produce semiconductor, which is exempted. So our assessment has been that the tariff rate is going to be much lower and the impact is smaller,” ASEAN Macroeconomic Research Office (AMRO) chief economist Hoe Ee Khor said in a briefing held in Singapore and streamed online.
AMRO forecasts the country to be among the strongest economies in the region for this year and next year, with growth seen at 6.3 percent for both years.
Khor noted that although the Philippines would be affected by the tariff issues, among others, it is projected to remain resilient because of its services sector, backed by the business process outsourcing (BPO) sector and, going forward, the knowledge processing outsourcing (KPO) sector.
“We think that the Philippine economy, generally, will emerge from this tariff war quite well,” he added.
In the long run, ASEAN member countries and neighboring economies are projected to have a potential growth of about 3.5 percent through 2040.
Allen Ng, AMRO group head and principal economist, said they categorize the Philippines as among the middle-stage economies and one of the key factors that would boost its potential growth is if its productivity improves.
“Efforts to actually improve productivity will be key, and this can be done through productivity-enhancing infrastructure, as well as a shift towards areas that are also productivity-enhancing,” he said during the same briefing.
He added that the use of technology in several sectors, such as agriculture and services, to provide value-adding factors would boost workers’ income, as well as the domestic economy’s potential growth.
“In fact, in our simulation, we showed that the Philippines would get another further above 2.0 percent growth if some of these reforms are implemented. So, we are not looking at 3.5 percent, we are looking at closer to 5.5 percent to 6.0 percent,” he said. (PNA)
