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‘More stable’ global economy under Biden presidency to benefit Philippines

THE PHILIPPINES is likely to benefit from a more stable world economy and subdued geopolitical tensions after United States President Joseph R. Biden, Jr. took office on Wednesday.

In his inauguration speech, Mr. Biden offered a message of reconciliation, as the United States looks to restore alliances around the world (Related story on S2/8 ).

“America has been tested, and we’ve come out stronger for it. We will repair our alliances and engage with the world once again. Not to meet yesterday’s challenges, but today’s and tomorrow’s challenges. And we’ll lead, not merely by the example of our power, but by the power of our example,” Mr. Biden said.

In a Viber message to reporters, Finance Secretary Carlos G. Dominguez III highlighted this passage from the US president’s speech, saying this “bodes well for a return openness to international trade and investment and  will undoubtedly redound to our mutual benefit.”

Former President Donald J. Trump had pushed his “America First” policy, and provoked a trade war with China. Under his administration, the United States withdrew from the Paris Agreement, a global commitment to fight climate change, and the  World Health Organization (WHO).

“Adherence to multilateral agreements like the WTO (World Trade Organization), climate agreement and WHO, to mention a few, will make the world economy less risky, less volatile and more stable plus additional stimulus spending by the Biden administration will help boost global recovery. The Philippines will benefit from all these,” Finance Undersecretary and Chief Economist Gil S. Betran told BusinessWorld in a text message on Tuesday.

Reuters reported Mr. Biden issued an executive order on Wednesday to bring the United States back into the Paris accord.

Cheuk Wan Fan, the head of investment strategy and advisory for Asia at the private banking arm of Hongkong and Shanghai Banking Corp. Ltd. (HSBC), said the leadership change in the United States may ease US-China trade tensions.

“We don’t expect that a change in US leadership will bring a quick U-turn in US-China relations. However, with the expected shift of the Biden administration to a more multilateral policy approach in dealing with trade and international policies, this will reduce the risk of a sharp escalation of US-China tensions,” she said in an online briefing on Wednesday.

The HSBC executive noted the Biden administration will likely bring more predictable and market-friendly trade policies, but trade tensions between the two countries will “not be totally over.”

The United States and China are the biggest trade partners of the Philippines, with the US being the top export destination followed by China in November last year. Meanwhile, China is the country’s biggest source of imported goods, followed by Japan and the US.

Meanwhile, the Biden administration is pushing for a $1.9-trillion stimulus package to drive economic recovery.

The planned big spending by the US government will help the global economy recover faster, which will benefit the Philippines through trade and other channels, said Michael L. Ricafort, the chief economist at the Rizal Commercial Banking Corp. (RCBC) in a note on Thursday.

“However, these could be offset by divided US Senate (evenly split between the Democrats and Republicans; though any tie-breaking vote may come from US Vice President Kamala Harris) could potentially slow down the enactment of larger US stimulus, higher taxes especially on the wealthiest, and tighter regulation of some industries,” he added. — Beatrice M. Laforga

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