Philippines' Economy at Risk Due to Geopolitical Turmoil and Lack of Diversification
The Philippines' economy is facing significant challenges due to the ongoing geopolitical turmoil. The country's strained relationship with China and its decision to take a more partisan side towards the US has put it at risk of being left behind in terms of economic growth compared to its ASEAN neighbors.
According to an ASEAN GDP per capita ranking, the Philippines is ranked fourth, following Singapore, Brunei, and Malaysia. It is also lagging behind other countries such as Vietnam, which has been able to diversify its economic ties with China despite sharing a border with it.
The US-China trade war has had a significant impact on the Philippine economy, with the country posting a 2.3% growth rate in the first half of this year compared to Vietnam's 8.1% growth. The US imposed a new 12.5% tariff on exports to the Philippines based on claims of 'forced-labor' imports.
Experts such as Frederic Neumann, chief economist of HSBC, have emphasized the need for the Philippines to diversify its economic engagement and reduce its reliance on the US-China relationship. He suggested that Europe, Australia, New Zealand, Japan, China, India, Africa, and other countries could be potential partners for the Philippines.
Former banker Antonio Moncupa also highlighted the importance of navigating the complex relationships between the US, China, and the Philippines without antagonizing any party. He noted that Malaysia, Indonesia, Thailand, India, Vietnam are examples of countries that have been able to diversify their economic ties with multiple countries.