The gyrations in the global financial markets are reflecting the unpredictability of an emerging new world economic order. US President Donald Trump’s governance style is greatly responsible for the turbulence in the global financial markets.
His decision to rewrite trading rules with major economic partners such as China, the European Union and the North American nations of Canada and Mexico has sent the global financial markets into a tailspin. Global risks and the attending rise in the value of the US dollar against virtually all currencies will ultimately affect all economies, including the Philippines.
Finance Secretary Carlos Dominguez III has acknowledged the external threats to the Philippine economy. Sitting idly and letting the storm pass, however, will not fortify the local economy and shield it from a possible global economic slowdown.
First and foremost, the government must effectively tame the inflation rate to sustain economic growth. Surging crude prices in the world market and the recent rice supply shortage have wreaked havoc on the economy.
Addressing the inflation concern by flooding the market with rice imports is a step in the right direction. But the external threats, including the US-China trade tensions, will not easily go away. Keeping the economic fundamentals, and not populist policies, will give the Philippines a chance to weather the financial storm.
The finance chief is also banking on the vigorous implementation of the Duterte administration’s “Build, Build, Build” infrastructure program. Increased spending on major infrastructure projects will generate employment and create demand in the economy. He called the program a countercyclical measure aimed at sustaining the country’s economic growth.
The global economic uncertainties may extend for a longer period, while the US-China trade tensions could take a turn for the worse. But the Philippines will survive the crisis as long as it maintains fiscal discipline and sustain the tax reform package it started.