Finance Secretary Carlos G. Dominguez III mentioned the Philippine financial system will seemingly be “collateral harm” and undergo “oblique shocks” on 4 main channels from the continuing Russia-Ukraine warfare.
Talking earlier than President Duterte and several other Cupboard members on Monday evening, Dominguez mentioned the Russia-Ukraine warfare will have an effect on the nation’s commodity market, monetary market, investments, and its fiscal well being.
Whereas Dominguez mentioned the Philippines isn’t immediately concerned within the warfare, he mentioned the nation will nonetheless be affected as a result of the battle will seemingly spur a rise in oil and meals costs, surge in rates of interest, and decline in investments amid risk-off surroundings.
“It’s as if we’re hit by ricocheting bullet,” Dominguez mentioned throughout his presentation to President Duterte and the Cupboard following the assembly of Financial Growth Cluster this afternoon whereby they mentioned the insurance policies that they’ll suggest to the President to alleviate the influence of rising oil costs amid the geopolitical stress between Russia and Ukraine.
“First, oil and meals costs are anticipated to go up as Russia is the most important exporter of pure gasoline and wheat, whereas Ukraine is the fourth largest exporter of corn. Because the battle continues, Ukraine and Russia’s foremost buying and selling companions, predominantly the European Union, will look to commerce with different international locations equivalent to US and China, the place we’re shopping for each wheat and corn, thereby pushing up the costs of commodities in these markets as properly,” he mentioned. “Second, the battle may also seemingly trigger a surge in rates of interest or value of borrowing which was already anticipated to go up even previous to the disaster due to the US Fed’s tightening financial insurance policies. The battle will enhance the notion of threat in investments.”
Dominguez added the battle may also trigger traders from the West to be extra conservative or postpone their deliberate investments amid uncertainty.
“As soon as sanctions are imposed it’ll take a very long time for investor and client confidence to return to regular,” he mentioned.
Aside from this, Dominguez mentioned the financial influence will seemingly require authorities help to guard the residents and the important sectors and it will additional stretch the nation’s price range.
Though the finance chief mentioned the disaster might enhance costs throughout a number of sectors and trigger the nation’s inflation fee to breach the federal government’s goal of two to 4 %, he expressed confidence that the federal government will nonetheless be capable of hit its inflation goal in addition to its 7 to 9 % financial progress goal for the yr.
Dominguez additionally harassed that they don’t count on the disaster to final very lengthy however he mentioned he mentioned there “could also be some lingering results.”
Nonetheless, he mentioned the nation has already weathered comparable crises prior to now, together with the 1990 first Gulf Warfare, 1997 Asian monetary disaster, 2008 oil worth shock, and likewise the 2014 first Russia Ukraine battle.
“These crises lasted like for much longer and but we have been capable of get by means of them. Based mostly on these experiences, we’re assured that we now have the instruments and the preparation crucial to assist our folks by means of this disaster,” he mentioned.