PHL to withstand global economic slowdown —DOF

The Philippines is likely to withstand a global economic slowdown that is expected to bite next year, the Department of Finance (DOF) said Wednesday.

Falling oil prices rekindled anxiety about the outlook for world growth, causing Asian shares to open the week on a negative note.

“The drop in oil prices will benefit oil importers. The benefit of one group is borne by the other group so the impact on global growth could very well be neutral,” Finance Assistant Secretary Antonio Lambino II said.

Data from the Department of Energy (DOE) showed that the Philippines recorded a net import bill of $9.92 billion in 2017, which is the difference between oil imports and exports.

The net import bill last year was 29 percent higher than the $6.89 billion registered in 2016, and was attributed to the combined effects of higher costs and volume of product imports.

“Lower oil prices would be welcome development for the Philippines,” Lambino said.

“This would help ease inflationary pressure from the largest imported source of elevated inflation, which is the price of our oil imports,” he said.

According to a report by Agence France-Presse, oil prices have shed about a fifth of their value over the past month, driven by oversupplies and fears of sluggish demand.

Historically, from 2014 to 2016, the decline in global oil prices was reported to have an adverse impact on global growth.

“As with much in life, there is a fine balance with respect to oil prices. When oil prices declined significantly from mid-2014 to early 2016, rather than being a boon to global growth, they had an adverse impact,” Morgan Stanley chief economist and global head of Economics Chetan Ahya, said in a research note last June.

“The capex cycle was already weak, and the fall in oil and commodity prices caused another downtick in capex at commodity companies and in commodity export-dependent countries,” Ahya added.

The Finance department said, however, that the country is unlikely to be affected by the perceived global economic slowdown in 2019.

DOE data showed that as of November 6 the prices per liter of gasoline ranged from P47.65 to P62.15 and diesel from P43.55 to P52.19.

The Philippines stands to benefit from lower oil prices in global markets, said Michael Ricafort, lead economist at Rizal Commercial Banking Corp.

“Oil prices declined to nine-month lows that could reduce the country’s oil imports and help reduce the trade deficit,” Ricafort earlier said.

According to the Philippine Statistics Authority, the country incurred a $3.927-billion trade deficit in September 2018, more than double the $1.752 billion in same month last year. —VDS, GMA News