NextGen Day

MANILA, Philippines — According to a Bangko Sentral ng Pilipinas (BSP) official, the Ukraine-Russia war will have a limited direct impact on the Philippines’ commerce sector.

BSP Department of Economic Research Managing Director Zeno Ronald Abenoja said in a virtual briefing aired on the central bank’s Facebook page that the Philippines’ total exports to Russia in 2021 amounted to about USD120 million, or about 0.2 percent of its total exports, while the country’s exports to Ukraine totaled USD5 million.

In the same year, Philippine imports to Russia accounted for 0.6 percent of total imports, while imports to Ukraine accounted for 0.1 percent, according to Abenoja.

“These figures show that direct trade ties are extremely weak. However, the impact, or potential implications, of the tensions in Europe may be connected more to the impact of the escalation on our key trading partners, such as the EU (European Union) and the United States,” he said.

According to Abenoja, the war’s most significant impact on the country so far has been “probably the rising prices of international commodities, mainly oil.”

He explained that fluctuations in oil prices on the international market affect the Philippines’ import bill, putting pressure on the current account and the year’s balance of payments (BOP).

According to Abenoja, monetary officials’ baseline expectations for crude oil prices this year have been revised up to an average of USD100 per barrel.

Given the impact of both local and global developments, the central bank’s policy-making Monetary Board has updated the BSP’s BOP stance for this year and next.

The BSP’s most recent BOP prediction for the year is a deficit of USD4.3 billion, or around -1 percent of GDP, down from a USD7 million surplus, or 0.2 percent of GDP, in December last year.

The reason for this was a modification in the current account assumption, which was reduced from a USD9.9 billion deficit to USD16.3 billion.

This shift was attributed to the projection that goods exports would increase by 7%, up from 6%, and goods imports would climb by 15%, up from 10% previously.

Exports of services are expected to increase by 11 percent from 5%, imports of services by 12 percent from 10%, business process outsourcing by 8% from 5%, and travel receipts by 100% from 25%.

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