March 8, 2022
MANILA — The Philippines will be able to get through the economic fallout from the Russia-Ukraine war, Finance Secretary Carlos Dominquez III told President Rodrigo Duterte on Monday in the taped weekly “Talk to the People” briefing.
“The Philippine economy will likely be collateral damage. It is as if we are hit by a ricocheting bullet,” Dominguez said.
He explained that neither Russia nor Ukraine was a major trading partner of the Philippines. But the conflict will affect four major channels: the commodity market, the financial market, investments, and fiscal health.
Oil and food prices are expected to go up, and there will likely be a surge in interest rates, Dominguez said.
Because of the “uncertainty” that the conflict had caused, he said investments will also likely decline or at least be on hold.
“[It] may cause investors from the West to be more conservative and postpone their planned investments,” he said.
If sanctions are imposed, it will take a long time for investor and consumer confidence to return to normal.
All of these may cause the government to “stretch” the national budget even further to protect vulnerable citizens and critical sectors most affected.
“We didn’t expect this crisis to last very long. However, there may be some lingering effects,” he said.
Dominguez pointed out that the Philippines had weathered “very well” other previous conflicts such as the Gulf War in 1990, the Asian financial crisis in 1997, the oil price shock of 2008, and the first Russia-Ukraine conflict in 2014.
“These crises lasted much longer and yet we were able to get through them. Based on these experiences, we are confident we have the tools and the preparations necessary to help our people through this crisis,” he said.