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Despite the stock plunge early this week, the Philippines remains the ‘regional star’.
According to Ditas Lopez of Bloomberg News, credit goes to what we don’t have — or what we don’t have much of. And that is: foreign investments. It is the “relatively low levels of foreign investment in its bonds and stocks” that is shielding us from the ongoing market meltdown.
“Stability under President Benigno Aquino stands in contrast to Thailand, ruled by the military since May 2014, and Malaysia, where the prime minister is facing calls to resign amid a political scandal,” she continues.
The report went on to giving Filipinos more hope. It noted that the Philippine peso has held up better than its neighbors, losing only 4.5% “compared with drops of 8 percent in Thailand’s baht, 12 percent in Indonesia’s rupiah and 18 percent in Malaysia’s ringgit.”
“The regional star” is what Edwin Gutierrez, who helps oversee USD$13 billion as the head of emerging-market sovereign debt at Aberdeen Asset Management in London, likes to calls us. “In a world starved of growth, Philippine growth — albeit slowing — is holding up relatively well,”
Gutierrez pointed out that the country’s “relative lack of foreign participation had protected it from capital flight.”
Indeed, Philippine economy “expanded 5.7 percent last quarter from a year earlier.” That, as the report indicated, “would be an improvement from 5.2 percent expansion in the first three months, although slower than 6.1 percent in 2014.” Meanwhile, Indonesian and Malaysian growth slowed to 4.67 percent and 4.9 percent, respectively, last quarter, while Thai gross domestic product increased 2.8 percent.
The report noted the following factors that have contributed significantly to the Philippines’ relatively OK economic standing:
- – a burgeoning business-process outsourcing industry, whose income is expected to reach to USD$21.2 billion this year and USD$25 billion in 2016
- – money sent home by Filipinos living abroad, which makes up about 10 percent of GDP, increased 5.6 percent to $12.1 billion in the first half from a year earlier.
- – falling crude prices, as the Philippines is a net oil importer it ran a USD$3.3 billion current-account surplus in the first quarter
The Philippines’ consumption-based economy and steady dollar inflows mean it’s insulated from China’s yuan devaluation and U.S. interest-rate increases, according to Jay Peiris, the International Monetary Fund’s representative in Manila.
In fact, Peiris said in an Aug 20 interview: “It’s very hard to think of a country that’s less vulnerable.”
Photo: StockMarketforPinoys.com
