PH Predicted to Gain the Least With Reopening of China

According to Maybank, a Malaysian financial giant, the Philippines is predicted to gain the least with China’s reopening.

Regional Co-head of Macro Research at Maybank, Chua Hak Bin has said that “The Philippines will likely gain the least from a China reopening due to the smaller links with China on exports, tourism, and investments, but heavy dependence on energy imports,”

According to Chua, the reopening of China’s economy may not necessarily add to the current deficit of the Philippines but this could work in the favor of Vietnam and Thailand.

“Thailand, Vietnam, and Singapore will see a big boost to tourism and exports, which will be partly negated by higher energy prices. The Philippines will gain the least, due to smaller economic links with China, which will be negated by higher oil prices,”  says Chua.

For the first half of 2022, the account deficit of the Philippines went up to $12 billion or 6% of the GDP.

The Bangko Sentral ng Pilipinas (BSP) sees this gap increasing to $20.6 billion or 5% of the GDP for this year.

The current account of the Philippines has increased to a deficit of -7.7% of the GDP in Q2 from -1.3% last year which was caused by skyrocketing costs of importation.

“The merchandise trade deficit with China is much smaller and has remained stable at around -4 percent of GDP, comparable to pre-pandemic levels. This suggests that a China reopening may not provide much support to the Philippines’ current account,”  says Chia.

Source: Philstar