UBS keeps PH forecast, lowers outlook for 2019
Swiss global financial services firm UBS is keeping its 6.8 percent 2018 growth forecast for the Philippines but warned that US-China trade war could weigh on the following year’s expansion.
In a report released on Wednesday, UBS noted that the Philippine gross domestic product (GDP) growth would pick up from 6.7 percent last year and then dip to 6.4 percent in 2019, lower than its previous forecast of 6.6 percent.
The estimates are also lower than the government’s 7.0-8.0 percent target.
Assessing the impact of a trade war on the Association of Southeast Asian Nations (Asean), UBS said it now believed “an escalation of United States-China trade tensions with a meaningful fallout on growth is more likely than not.”
Growth forecasts for China and the US were revised downward in anticipation of Washington imposing additional tariffs on $200 billion of Chinese goods and likely retaliation by Beijing.
UBS said potential gains in market shares in either the US or China would be too small to make much difference for most Asean economies, especially when netted with the direct impact of globally levied US tariff increases to date.
“We note the possibility but do not expect Asean economies to be individually targeted by US trade policy,” it added.
It also highlighted that the more open economies of Singapore, Thailand and Malaysia faced a bigger impact than the relatively closed economies of Philippines and Indonesia.
Assuming that tariffs on the $200 billion of Chinese goods will be levied in September, the impact on the US and Chinese economies likely be felt in the fourth quarter 2018, UBS said.
“As such the impact on Asean economies will likely be most visible in late 2018 and early 2019 — and this is reflected in the changes to our 2019 real GDP growth forecasts,” it noted.
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