November 11, 2024 | 12:00am
MANILA, Philippines — Nomura Global Markets Research warned that a second Trump presidency could bring adverse impacts for Southeast Asia, particularly affecting the Philippines’ growth trajectory due to heightened geopolitical risks, volatility in remittances and vulnerabilities in the outsourcing sector.
In its Asia Economic Monthly Report, Nomura said that Trump 2.0 would be negative for growth in the Association of Southeast Asian Nations (ASEAN) region, albeit to varying degrees.
“The effects from lower global growth, led by the US and China, would affect small open economies. Increased global policy uncertainty, alongside geopolitical risks, could hurt business sentiment and private investment spending,” it said.
Nomura said that Singapore’s large open economy may face the strongest headwinds due to weakening external demand and lower export growth.
Malaysia may also be vulnerable, but higher foreign direct investments (FDI) could mitigate the impact of a second Trump presidency.
“The Philippines does not have a similar cushion and will be at risk from the impact on workers’ remittances from a possible tightening of US immigration policy and on the outsourcing sector,” Nomura said.
The Philippines depends significantly on remittances from overseas Filipino workers and a thriving business process outsourcing sector.
Should immigration policies in the US tighten and Filipino remittances decline, household incomes and consumer spending could be strained.
Based on central bank data, personal remittances stood at $3.2 billion in August, 3.3 percent higher than the $3.1 billion remitted in the same month in 2023, but slightly lower than the $3.43 billion recorded in July.
Year to date, personal remittances grew by three percent to $24.74 billion from $24.01 billion in the same period in 2023.
Beyond economic concerns, the Philippines could also face increased risks in the South China Sea, as Nomura predict a weaker US security stance may embolden Chinese assertiveness in the region.
“Increased geopolitical tensions in the South China Sea due to the lack of US security support could put the Philippines on the front line. This could be an issue for the broader region, if China’s assertiveness in the disputed waters intensify,” it said.
Nomura expects the Philippines to grow by 5.6 percent in 2024 from 5.5 percent last year, before picking up to 6.2 percent in 2025.
Meanwhile ANZ Research said President Trump’s current proposals threaten to increase trade restrictiveness and are more severe than what he previously implemented.
“A material tariff increase on US imports from China would disrupt supply chains and hurt US and global demand. Asian producers, both export and domestic oriented, will face greater competition,” it said.
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