Harris presidency more beneficial to PHL economy

A Kamala Harris presidency would be more beneficial to the Philippine economy, analysts said, noting the potential impact on monetary policy, trade and other economic indicators.

“The implications of a Trump or Harris presidency on the Philippines can vary significantly, particularly in terms of interest rates, foreign exchange, and the overall economy,” Jonathan L. Ravelas, senior adviser at professional service firm Reyes Tacandong & Co., said.

Republican candidate Donald J. Trump faces Vice-President and Democratic nominee Ms. Harris in the US presidential elections on Nov. 5.

More than 75 million Americans have already cast their ballots, according to the Election Lab at the University of Florida, Reuters reported.

Mr. Ravelas noted the impact of the US elections on the US Federal Reserve and possibly the Philippines’ own monetary policy.

“A Harris presidency is expected to maintain a more stable economic policy, similar to the current administration. This could lead to a more predictable interest rate environment, with the US Federal Reserve potentially continuing its rate-cutting cycle,” he said.

The Bangko Sentral ng Pilipinas (BSP) kicked off its easing cycle in August, delivering a total of 50 basis points (bps) worth of rate cuts since then. BSP chief Eli M. Remolona, Jr. has also signaled further easing moving forward.

The Fed likewise began cutting interest rates in September, its first time reducing rates in four years. It delivered a larger-than-expected half-percentage-point cut, bringing the Fed funds rate to the 4.75%-5% range.

Markets are anticipating further rate cuts from the US central bank, but at a more modest pace of 25 bps.

On the other hand, Mr. Ravelas said a Trump win could “lead to higher interest rates in the US due to potential inflationary pressures from increased fiscal spending and tariffs.”

The former US President plans to implement stringent trade restrictions including a 10-20% universal tariff on all imports as well as a tariff of 60% or higher on Chinese goods.

On the other hand, Ms. Harris has opposed the concept of a universal tariff, instead favoring “strategic tariffs to help workers or punish trade adversaries,” Reuters reported.

The Philippine economy is seen to more likely thrive under a Harris presidency amid her less restrictive trade policies, analysts said.

“The Philippine economy could benefit from policy continuity under Harris. Her administration is likely to focus on strengthening economic ties and maintaining stable trade relations, which could support Philippine exports and the business process outsourcing (BPO) sector,” Mr. Ravelas said.

“A Trump presidency could introduce more economic uncertainty and potential challenges for the Philippines, while a Harris presidency might offer more stability and continuity in economic policies.”

ANZ Research said that while both candidates’ platforms are restrictive on trade with China, each have different approaches.

“Trump’s stance tends to be ‘American only,’ while Harris will likely extend Biden’s ‘friend shoring,’” it said in a report.

Data from ANZ showed that during the Trump and Biden terms, the United States imported less from mainland China and more from the rest of Asia. However, a second Trump term would “likely target Asia more broadly.”

“Biden’s administration has maintained the tariffs imposed under Trump. He also strengthened export controls,” it said.

“This policy mix has changed global and Asian trade patterns. Between June 2018 and September 2024, US goods imports from mainland China slumped by 20%. The share of US total imports from mainland China fell 8% to 14%.”

ANZ noted that Ms. Harris is likely to favor the Indo-Pacific Framework proposed by Mr. Biden, while Mr. Trump is not in support of multilateral agreements, citing his withdrawal from the Trans-Pacific partnership.

“Trump’s current campaign proposals are more severe than the actual trade policies he implemented as president. If his current proposal of a 60% tariff on all Chinese imports and a 10-20% universal baseline tariff become a reality, the average US tariff would rise to 17.7%, a level not seen since 1934,” ANZ said.

This would have consequences such as higher prices for US consumers; margin compression for Chinese exporters and US importers; as well as a negative effect on the rest of Asia despite a supply-chain diversion from China, it added.

Mr. Ravelas noted that Mr. Trump’s protectionist policies “could hurt the Philippine economy by reducing exports to the US and affecting remittances from Filipino workers in the US.”

The United States remains the top destination of Philippine-made goods. In August, it accounted for close to 20% of exports during the month.

The world’s most powerful economy also typically accounts for nearly half of overall monthly remittances to the Philippines.

Meanwhile, the peso is also seen to be under less pressure if Ms. Harris assumes the presidency.

“The Philippine peso might experience less volatility under a Harris presidency. A stable US economic policy could lead to a more predictable exchange rate environment, benefiting the Philippine peso,” Mr. Ravelas said.

Under a Trump administration, the local currency could depreciate against the dollar if US interest rates rise.

“Investors might prefer the higher returns in the US, as well as the impact of tariffs could lead to competitive devaluation.”

The peso closed at P58.10 per dollar on Thursday, rising by 13 centavos from its P58.23 finish on Wednesday. Peso trading was closed on Friday due to the All Saints’ and Souls’ Day weekend.

The peso has returned to the P58-per-dollar level since August.

Source: Business World

The Power of "Po": A Symbol of Respect in Filipino Communication

Filipino-American Heritage Month is not only a celebration of the achievements, culture, and contributions of Filipinos in America but also an opportunity to delve deeper into the unique intricacies of Filipino customs and traditions. One such tradition, embedded deeply in the Filipino psyche, is the use of the word "po" in communication.

The Filipino language, or Tagalog, is beautifully enriched with expressions that emphasize respect and politeness. Among these expressions, "po" stands out as a reflection of the Philippines' deeply-rooted value for elder respect and courtesy. To someone unfamiliar with the language, this small word might seem insignificant. However, in the world of Filipino communication, its presence is powerful and profound.

The Essence of "Po"

The use of "po" is prevalent in both spoken and written forms of Filipino communication. It is often inserted in sentences to show deference to someone older or in a position of authority. For instance, the simple greeting "Magandang araw" (Good day) becomes "Magandang araw po" when addressing someone with respect.

While it's common to hear "po" in everyday conversations, its appearance in written official communications might surprise non-Filipinos. But yes, even in emails and formal letters, if the content is in Filipino, you might come across this term. This incorporation of "po" in written communication is a testament to its importance in the Filipino culture.

A Cultural Hallmark

The consistent use of "po" mirrors the Philippine's communal and family-oriented values. In traditional Filipino families, younger members are taught early on to respect their elders. This respect is not limited to familial relations but extends to society at large, which includes teachers, neighbors, and even strangers who are older or are deemed deserving of respect.

Using "po" is an embodiment of "pakikisama" – a Filipino cultural concept that can be translated as 'going with the flow' or 'getting along with others'. It is a way of maintaining harmony and smooth interpersonal relations.

In the Globalized World

For Filipino-Americans and those in the Filipino diaspora, "po" serves as a link to their roots. It's a reminder of home, values, and the teachings of their elders. Even in communities where English dominates, many Filipinos still make it a point to use "po" when speaking in Tagalog or even when mixing English and Tagalog, known as "Taglish."

In a world that is rapidly changing and often puts individualism at the forefront, the Filipino commitment to values of respect, deference, and communal harmony is a breath of fresh air. It's a gentle reminder that there's beauty in showing respect and acknowledging the wisdom of those who came before us.

As we celebrate Filipino-American Heritage Month this October, let's take a moment to appreciate the small yet significant ways that Filipino culture shines through, like the simple use of "po." It serves as a symbol of respect, a bridge between generations, and a testament to the enduring values that Filipinos hold dear, no matter where they are in the world.

Source: Linkedin

Household spending boosted by remittances

Overseas remittances substantially boost household spending and are dependent on a host of factors that include the exchange rate, unemployment and transfer costs, Bangko Sentral ng Pilipinas (BSP) researchers said.

In a discussion paper, researchers Veronica Bayangos and Cymon Kayle Lubangco noted that OFW remittances have long been a vital pillar of the Philippine economy, supporting household spending and foreign currency reserves, especially in economically challenging periods.

OFW households, they said, prioritize consumption over savings and investments. Migration status and educational attainment also influence where the money is used.

Immediate consumption also tends toward non-food, and "largely welfare-inducing" items such as health, education and housing, while allocations for productive consumption goods "shows that remittances are treated as transitory income."

"Our estimates reveal that receipt of cash remittances is positively driven by the number of OFWs abroad, unemployment rate, and the depreciation of the peso against the dollar," the researchers said.

"However, high regional wages and bank financial transaction costs reduce remittance receipts."

Remittances may cushion labor market shocks in the short term, but OFW households are also at risk if economic conditions in host countries also worsen, the researchers noted.

Financial development, meanwhile, was said to help raise remittances, but only if accompanied by increased financial inclusion and lower transaction costs.

An apparent decline in cash remittances, the BSP researchers said, can be attributed to a rise in the cost of sending money from abroad to the country.

As of the first quarter of 2024, 96.6 percent of surveyed OFWs families said they were using remittances for food and household needs. Allocations for medical expenses and home purchases also rose compared to the fourth quarter of 2023.

On the other hand, the proportion of households that used remittances for education, savings, consumer durables, debt payments, motor vehicle purchase and investments fell, the researchers noted.

Remittances have been relatively stable at 8.0 to 9.0 percent of nominal gross domestic product since 2017, they said, while cash remittances are slightly lower at 7.0 to 8.0 percent.

Cumulative growth for both types has trended downward, the researchers noted.

The US remained the largest source of remittances as of last year. The Philippines was among the top five five recipient countries at $40 billion, outpaced only by India ($125 billion), Mexico ($67 billion) and China ($50 billion).

The BSP researchers noted that while remittances are expected to grow by 3.1 percent this year, this could change due to an escalation in the US-Ukraine war and conflicts in the Middle Ease, volatile oil prices and exchange rates, and greater-than expected economic slowdowns.

A substantial decline would have an impact at both the macroeconomic and household levels, they said, with families likely to face reduced capabilities to meet education and healthcare needs.

Do Remittances Boost Household

.pdf

Download PDF • 995KB

Source: Business World and BSP