THE Philippines is “affected but not stressed” when it comes to economic downtrend of the global economy.
This was how Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo described the resilience of the domestic economy to the members of the Financial Executives Institute of Cebu (FINEX-Cebu) Inc., during the organization’s first general membership meeting this year at the City Sports Club Tuesday.
Guinigundo said China’s slower growth, plummeting oil prices and the US Federal Reserve’s maturing treasuries are factors that could affect the Philippines, although he believes the impact is not as severe.
“Philippine economic growth will stay firm...We are optimistic about the Philippines because our capacity for growth is increasing,” the BSP official said.
The grounds he cited include the Philippine debt market reflecting vibrant growth despite widening sovereign debt premiums and the significant rebalancing in the equities market through correction, which is restoring relative value opportunities.
In addition, he said the Philippine asset market remains to be within intrinsic values. He also noted that inflation continues to be manageable while government finances are “well-managed”.
Guinigundo also cited that the Philippines was able to establish policy reforms constituted in the present and previous administrations, making growth sustainable.
“The Philippines could grow by more than eight percent if external markets are good. The external trade is beyond us,” Guinigundo said. The external factors are limiting the country’s economic growth at between six and seven percent.
Despite these positive economic fundamentals, Guinigundo noted that the country is not exempt from the negative sentiments of fund managers towards emerging economies.
To answer this, he said the country should continue to communicate its stability and resiliency.
“We have to talk and communicate where we are coming from so they can appreciate that the stability is not just a word, but stability is something that we intend to achieve through various measures...Communication is the only way by which we can influence negative market sentiments” Guinigundo said.
The Philippines was hailed by the Center for Global Development as the most resilient economy among 21 countries examined, with Korea ranking second and China third.
The country has also been recognized by various credit rating agencies like Standard & Poor’s with a credit rating of BBB, Moody’s (Baa2), and Fitch Ratings (BBB-).