Phl should diversify economic engagements

The Philippines, grappling with geopolitical tensions and economic challenges, must diversify its economic engagements, according to experts. The US President Donald Trump's tariff restructuring, combined with the country's strained relationship with China over territorial disputes, has placed the Philippine economy and its businesses in precarious position.

Currently, the Philippines lags behind its ASEAN neighbors in terms of economic growth, with Malaysia, Thailand, Indonesia and Vietnam posting higher GDP numbers. The ASEAN GDP per capita ranking for 2026, based on IMF forecasts, predicts Singapore leading the region, followed by Brunei, Malaysia, Thailand, Indonesia, Vietnam and the Philippines. The four countries at the bottom of the list are Cambodia, Laos, Timor Leste and Myanmar.

Vietnam, despite bordering China and having previous clashes over territorial claims, has chosen to pursue economic growth through mutual benefit with China. This strategy has resulted in an 8.1 percent growth for the first half of the year. The Philippines, on the other hand, has struggled with a 2.3 percent growth, adopting a more partisan stance towards the US, despite the latter waging a tariff war against traditional allies, including Canada.

Recently, the US imposed a new 12.5 percent tariff on exports to the US, allegedly due to "forced-labor" imports. However, Filipino labor unions have managed to negotiate higher wages, though not to the level they desire.

The HSBC summit in the Philippines highlighted the need for the country to diversify its economic partnerships. Frederic Neumann, HSBC's chief economist, emphasized that while the US relationship remains a strength, diversification is crucial for stability. He suggested that Europe, Australia, New Zealand, Japan, China, India and Africa could be potential partners.

Vietnam's active engagement in free trade agreements and India's recent initiation of negotiations with various countries are cited as examples of successful diversification.

Former banker Antonio Moncupa further emphasized the need for careful navigation in diplomatic relations, stating that the Philippines should not have to choose between the US and China. He argued that the country does not possess the capability to wage war and should instead focus on maintaining friendly relations with both nations. Moncupa suggested that there is no need to escalate territorial disputes with China, as the country is not capable of standing up to its neighbor.