Slowdown in global growth brought about by the trade tensions between the United States and China could adversely affect low-income and emerging economies like the Philippines, according to Carlos Dominguez, secretary of the Department of Finance (DOF).
In his statement during the 102nd meeting of the ministers and governors of the Intergovernmental Group of 24 (G-24) at the IMF headquarters in Washington DC last Thursday, Dominguez also raised concern on the rise of protectionism and negative interest rate policies as well as the increasingly debilitating effects of climate change and profoundly disruptive technologies.
“A slowdown in the world’s economic performance will have significant adverse effects on low-income countries and emerging economies. If present trends continue, all the work we have put in preparing our economies for competitive trade, improving our domestic efficiency, and maintaining the highest standards for fiscal discipline will fail to ensure inclusive growth,” Dominguez said.
In the Philippines, Dominguez said the DOF and the Bangko Sentral ng Pilipinas have cooperated well in ensuring fiscal discipline leading to robust revenue flows, historic high international reserves, a credit rating upgrade, a declining debt-to-gross domestic product ratio, and “substantial progress” in reforming the tax system, modernizing the country’s infrastructure and further liberalizing its economy.
Dominguez, who sits as the governor for the Philippines in the board of governors of the World Bank, urged the International Monetary Fund (IMF) and World Bank to help emerging economies in “mitigating, if not reversing” the factors that could undermine prospects for global growth.
The finance chief called on the IMF and the World Bank to re-examine the traditional interventions and discard those that no longer work in favor of bold, out-of the box solutions for the institutions to remain in the foreground of the global economic
Dominguez also expressed deep concern over the reality that an estimated 47 percent of low-income developing countries are now in debt distress, with development aid across the globe having dropped by 2.7 percent last year and bilateral official development assistance (ODA) to the least-developed countries falling by three percent.
He viewed these circumstances with unease, especially because ODA make up two-thirds of the external financing for countries that are most in need of such assistance.