PH ‘remarkably resilient’ to US tariffs, says Japan rating firm
The Philippines would stay “remarkably resilient” to external shocks despite increased uncertainties caused by changes in American tariff policies, said Japan Credit Rating Agency (JCR).
However, some Philippine exporters do not share the same optimism. Some of them have suspended their shipments to the United States while waiting for further clarity, especially given US President Donald Trump’s threat to slap tariffs even on semiconductors.
The country’s export revenues may only reach up to $110 billion this year, falling below the target, as uncertainties surrounding US President Donald Trump’s tariff policy loom, said Sergio Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc. (Philexport).
On the other hand, JCR cited the country’s healthy gross international reserves, which remained above $100 billion amid steady capital inflows, alongside the global debt sale of the government.
JCR, whose credit opinion matters to Japanese investors, recently affirmed the Philippines’ “A-“ rating with a “stable” outlook.
A high score reflects low credit risk, which helps lower borrowing costs. This, in turn, allows the government to channel more resources toward socially beneficial programs and initiatives.
Finance Secretary Ralph Recto earlier said the Philippine government is weighing a return to the Japanese debt market next year, which would be its first “samurai” bond sale in three years.
“The ratings mainly reflect the country’s high and sustainable economic growth supported by solid domestic demand, low-level external debt and resilience to external shocks supported by accumulated foreign exchange reserves,” JCR said in a report on Sept. 17.
“However, reducing income disparity through rural development and infrastructure development remains a key challenge,” it added.
The Japanese debt watcher also cited the country’s stable financial system as one of the key factors behind the Philippines’ sustained investment-grade credit rating. The agency noted strong loan growth, lower nonperforming loans ratio and capital adequacy ratios that are “well above” both Philippine and international standards.
Wait and see
Philexport’s Ortiz-Luis said the target export revenues this year might no longer be attainable due to the reciprocal tariff that has been set at 19 percent for Philippine goods coming to America.
“There were some who said they no longer wanted to or at least they are holding off until things become clearer,” Ortiz-Luis said.
The projected export receipts will fall short of the $113.42-billion target for 2025 under the Philippine Development Plan, and far below the $163.6-billion initial goal set in the Philippine Export Development Plan.
The country’s export sales reached $7.34 billion in July, up 17.3 percent from $6.25 billion recorded in the same period a year ago, data from the Philippine Statistics Authority showed. Electronic products topped the list with $3.92 billion or 53.5 percent of the total.
The US remains the leading trading partner, with exports equivalent to $1.16 billion or a 15.8 percent share.
Total exports climbed by 13.9 percent to $48.62 billion in the January to July period.
“Unless something positive comes, the slowdown will continue in the US. Hopefully, we can find alternative markets. Unfortunately, we don’t have the weather to find markets,” Ortiz-Luis said.
He said the supposed assistance to exporters was mere “lip service” given the insufficient funds and the lack of research and development.
