MANILA, Philippines – The country’s sea dispute with China will have a manageable impact on the economy provided as this does not escalate, the International Monetary Fund (IMF) said.
“Geopolitical risks can have an effect on growth in the Philippines but at the moment there aren’t that many signs that it’s having a direct impact,” IMF resident representative Shanaka Jayanath Peiris said.
“As long as it doesn’t escalate, it should have manageable impact,” Peiris said.
The Philippines in March submitted a written argument before the United Nations arbitral tribunal on China’s claim over almost the entire South China Sea.
This was, however, rejected by China as the world’s second largest economy reiterated its position remains unchanged.
Recent action has been taken by the Philippines against China after the latter’s coast guard fired water cannon at Filipino fishermen sailing over disputed waters.
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China was the Philippines’ third largest export market last year, data from the Philippine Statistics Authority showed. At the same time, China is the biggest source of imports for the Philippines last year.
The Bangko Sentral ng Pilipinas last month said it closely monitors geopolitical risks abroad and in the region, including those involving the country, as they may directly and indirectly impact domestic prices.
BSP Governor Amando M. Tetangco Jr. said then that conflicts sometimes affect global trade and in turn, causes volatility in international commodity prices due to supply disruption.
Conflicts, even those not directly involving the Philippines, are crucial as these can indirectly impact the domestic economy through ripples created in global supply chains and trade movements.
Tetangco earlier said the central bank stands ready to adjust policy settings in the case risks escalate and additional measures will be needed to ensure price and financial stability.
