Donald Trump was inaugurated as the 47th president of the United States on January 20, 2025, and his return to the White House is raising concerns about its potential impact on global markets, including the Philippine stock market. Following Trump's election in November 2024, Philippine stocks experienced a sharp decline, primarily due to fears surrounding inflation and potential tariff increases. Historical data indicates that during Trump's first term from 2017 to 2020, the average inflation rate was 2.1%, while the U.S. 10-year bond rate averaged 2.5%, peaking at 3.2% in 2018. [40f4f5e1]
The Philippines, which is a net importer with consumer spending constituting 70% of its GDP, exported $11.1 billion worth of goods to the U.S. in the first 11 months of 2024, a figure that represents less than 0.5% of total U.S. imports. This dependency on imports raises concerns about how U.S. economic policies under Trump could affect the Philippine economy, particularly in light of the anticipated budget deficit and debt issues in the U.S. [40f4f5e1]
Scott Bessent has been nominated as Treasury Secretary with a mandate to reduce the U.S. budget deficit from 7% to 3% of GDP by 2028. Analysts warn that any negative impact on U.S. economic growth could lead to a correction in U.S. stocks, which would likely reverberate through to the Philippine market. [40f4f5e1]
Despite these challenges, some experts suggest that sell-offs in the market should be viewed as buying opportunities, particularly for long-term investors. As the economic landscape evolves under Trump's administration, the interplay between U.S. policies and Philippine market dynamics will be crucial for investors to monitor. [40f4f5e1]
In summary, while the inauguration of Trump brings uncertainty, particularly regarding inflation and tariffs, it also presents potential opportunities for investors who can navigate the shifting economic tides. [40f4f5e1]