THE Philippine economy has proven its strength with firm structural foundations and low inflation, showing resilience against global shocks.
Glenn B. Maguire, chief economist of Asia Pacific for ANZ, in his presentation during the recent banking convention in Manila, referred to the Philippines as the “strong man of Asia” in 2014. In past decades, the Philippines had been derisively referred to as the “sick man of Asia.”
Maguire observed that the impact of global shocks on the country was not as significant as expected and that the Bangko Sentral ng Pilipinas (BSP) is closely monitoring the economy.
“The positive outlook on the financial industry and the participation of private and public institutions give the country a high level of resilience against external shocks,” he said.
“The BSP’s proactive role ensures Philippine banks’ robust balance sheet and risk levels,” he added.
This year’s growth outlook stands at 7.1 percent and is expected to ease to 6.5 percent next year, helped by the Public-Private Partnership (PPP) Program.
He said inflation was 2.7 percent in September, lower than the BSP’s target of 3 percent-to-5 percent range for 2013.
He also noted that the Philippine banking system is the only one in the world with a positive credit outlook from Moody’s.
“The Philippine economy is attractive to foreigners and can weather external headwinds…. The remittances should remain a support to private consumption, and household spending is expected to buffer against adverse external swings,” he said.
Meanwhile, a Citi Research note released recently said the Philippines, Thailand and Malaysia were in a stronger position to boost capital accumulation, given that they are not (less) constrained by low domestic savings and excess capacity/low returns.
The Philippines, Thailand—and to a lesser extent Malaysia—have an advantage, as neither of the three is constrained by either low domestic savings (although Thailand is a bit more than the others), a weak banking system or “excessive” investment with rapidly diminishing returns.
“We think the Philippines has the biggest advantage, given the sheer scale of underinvestment and excess domestic savings, but institutional/ governance issues may be the more binding constraint,” Citi said.
ANZ, according to its web site, is one of the five largest and most successful listed companies in Australia, and the No. 1 bank in New Zealand. It has assets of A$531.74 billion (as of September 30, 2010) and operates in more than 32 countries across Australia, New Zealand, the Pacific, Europe, Dubai, the US and Asia.