4 weeks ago
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Keisha Ta-Asan - The Philippine Star
February 19, 2025 | 12:00am
YeeFarn Phua, director at S&P, said that while countries such as China, Vietnam, Malaysia and Taiwan face risks from US tariff policies, the Philippines has so far stayed out of the equation.
STAR / File
MANILA, Philippines — The Philippines is expected to remain insulated from the impact of potential United States tariffs on Asian economies due to its trade surplus with the world’s largest economy, an advantage among its regional peers, according to S&P Global Ratings.
YeeFarn Phua, director at S&P, said that while countries such as China, Vietnam, Malaysia and Taiwan face risks from US tariff policies, the Philippines has so far stayed out of the equation.
“The Philippines is one of the major economies, perhaps the only major economy in the region, that actually has a trade surplus with the US,” Phua said in a webinar yesterday.
“For now, when it comes to talking about tariffs on certain countries, the Philippines has not come up in the equation for the meantime,” he said.
However, Phua said that the Philippines could see second-order effects if US tariffs shift production away from affected economies.
This could benefit industries involved in lower-value supply chain activities, such as electronics assembly and packaging.
“If you’re talking about high-tech, cutting-edge technology, perhaps the Philippines will not be in a position at this moment to benefit from it,” Phua said.
“But if you’re looking at production down the value chain, like assembly and packaging of electronic goods, there could be some advantages for the Philippines in that sense,” he added.
He said these benefits, in turn, could help boost economic growth and support foreign direct investments as well.
Despite these potential benefits, Phua said that trade shifts are not the primary factors influencing S&P’s credit rating assessment for the Philippines. The ratings agency is focusing on two key areas; rebuilding external buffers and maintaining fiscal consolidation.
S&P currently assigned the Philippines a ‘BBB+’ rating, with an outlook tied to the country’s ability to stabilize its current account deficit and strengthen its external position.
The Philippines’ external buffers have been eroded in recent years due to global economic headwinds, making it crucial for the country to maintain a moderate current account deficit.
“The Philippines needs to rebuild those external buffers before its ratings could be upgraded,” Phua said.
On the fiscal front, Phua said that the government’s revised economic projections under the medium-term fiscal framework last year were more realistic than previous targets.
