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Diokno downplays impact of US-Iran tension on local economy

Bangko Sentral ng Pilipinas Governor Benjamin Diokno on Tuesday downplayed any significant impact on the Philippine economy of the tension between the United States and Iran.

“What I can say is let’s not be alarmist here. Let’s not be alarmist,” Diokno said at a breakfast forum of the Tuesday Club at Edsa Shangri-La Hotel in Mandaluyong City.

“They were pointing out huge surge in the price of oil. They did surge for a few  dollars. But you know, for the oil prices to make a difference in our forecast, it has to hit $90 per barrel,” Diokno said.

BSP Governor Benjamin Diokno
He said the Dubai price of oil was still below $60 per barrel.

“So let’s not panic with this, okay? Secondly, on the impact on remittances, as you know, our deployment in the Middle East is largely going to Saudi Arabia, rather than Iraq or Iran. So let’s not panic about this. It is too early to make any prediction at the moment,” Diokno said.

Global oil prices climbed by over 4 percent following Pentagon’s confirmation that an airstrike in Baghdad international airport on Jan. 3 targetted top Iranian commander Qasem Soleimani.  Brent rose 4.4 percent to $69.16, while WTI increased 4.3 percent to $63.84, according to Agence France Presse.

The Energy Department said earlier it was hoping the US-Iran conflict would not affect global oil supply which could trigger an increase in oil prices.

President Rodrigo Duterte appealed to Congress to set aside a day or two to tackle the impact of the conflict, which he called an “evolving crisis.”

Hongkong and Shanghai Banking Corp. said Tuesday that global uncertainties and geopolitical tensions would continue to be among the major risks to economic growth this year, but the Philippine economy would remain resilient.

Fan Cheuk Wan, HSBC managing director and chief market strategist for Asia, said in a briefing in Taguig City that the Philippine economy would grow by 6.4 percent in 2020 and 6.5 percent in 2021, faster than the estimated 5.8 percent in 2019.

She said growth would be driven by robust consumption amid slow inflation and the rebound in investments.

Fan said that remittances would continue to have a stable growth similar to 2019, despite the tension in the Middle East which is one of the major sources of remittances each year.

Latest Bangko Sentral data showed that money sent home by overseas Filipino workers rose 8 percent in October 2019 to $2.67 billion. This brought cash remittances in the first 10 months to $24.858 billion, up 4.6 percent from $23.768 billion a year ago.

“The Philippines will continue to outperform its peers in the region,” Fan said.

Topics: Bangko Sentral ng Pilipinas , BSP Governor Benjamin Diokno , US-Iran tension , Philippine economy , United States , Iran
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