Economic risks confronting the Philippines increased further after US President Donald Trump announced another round of retaliatory tariffs on Chinese goods, which he attributed to Chinese officials failure to make good on their promises.
“Definitely this action will tend to increase the economic headwinds we are already facing,” Finance Secretary Carlos Dominguez III said.
The US government slapped additional 10 percent duties on another USD300 billion worth of Chinese goods effective September 1, 2019.
Trump said Chinese officials have agreed to buy US agricultural products in hefty quantities but have not done it.
The additional taxes was announced after the US earlier required 25 percent duties on USD250 billion worth of Chinese imports.
Trump’s decisions are targeted to secure a trade deal with the world’s second largest economy even as extended negotiations continue to remain fruitless.
He earlier claimed that China is stealing American intellectual property and military technology, among others, with the latter has denied.
The trade war has reportedly affected global trade, with ripple effects in the Philippines.
The Finance chief said impact of this new development “will be the subject of our next Economic Development Cluster Meeting.”
He, however, did not elaborate when the meeting will be held.
Asked if this latest news will be grounds for a cut in the Bangko Sentral ng Pilipinas’ (BSP) key policy rates, Dominguez, who sits at the seven-man policy-making Monetary Board (MB) as Cabinet representative, said this will be among the factors they would look into.
“Latest moves of the US will be part of the analysis,” he added.
Last May, the MB slashed the BSP’s key policy rates by 25 basis points after noting the continued deceleration of domestic inflation and continued domestic growth despite a slow start this year. This was supposedly due to the delay in this year’s national budget.
Analysts forecast the MB to start cutting rates again after inflation returned to its downward path last June, which it posted a slower rate of 2.7 percent after an uptick to 3.2 percent last May from the previous month’s three percent.
The BSP’s average inflation projection for this year is 2.7 percent. (First published by PNA, Aug. 1, 2019)