PH ‘not strong economy yet’

DESPITE the country’s continued growth, the Philippines is not a strong economy yet, according to Philam Life and Philam Asset Management Inc. (Pami) fund manager Junie Banaag.

Unemployment and the continued deployment of Filipinos overseas continue to challenge the country’s economic prosperity, Banaag said.

“We are not a strong economy yet but we are primed for growth so long as existing conditions will allow the economy to continue growing,” said Banaag last Wednesday, referring to the country’s investment grade status, high liquidity and high profitability of listed companies.

Instead of describing the current situation as an economic boom, Banaag described the

country’s economic condition as a result of excess in liquidity.

He said the country logged $84 billion gross international reserves, $8.67 billion foreign currency deposit units and P2 trillion special deposit accounts.

u201cWe are awash with cash. We are stable and growing but growth becomes ideal when investment spending is consistent. Government spending for instance is not growing,” he said.

For Filipinos to feel the economic growth, Banaag said the government should make use of excess to fund infrastructure development to generate jobs. He said the government should also meet its committed reforms to achieve economic prosperity.

He said the foreign investors coming into the country are not merely motivated by potential earnings but also by the government’s strong commitment to reforms.

Banaag also forecast that the country’s stock market will continue to perform higher in the coming years, as profitability of companies continue to soar.

He said listed companies are posting a 16 percent increase in their net income in the past five years while the stock market index is averaging a 19 percent growth annually.

u201cThis just means that the market is upbeat,” he said. “It (stock market) will perform better because it’s going higher and higher,” he said.

The stock market index is expected to reach the 7,800 to 8,000 levels, even boosting further investor confidence, according to Banaag. The Philippine Stock Exchange index closed yesterday at 7,268.91.

u201cGiven the stock market’s performance, coupled with the investment grade ratings, there is every reason to invest in the stock market,” he said.

If growth will be sustained, Banaag also said the country will graduate to where Indonesia is in a year or two. He said the upgraded credit status of the country puts the Philippines at par with Indonesia, an economy that is 3.5 times larger and characterized by higher savings and investment rate.

u201cThe best is yet to come in terms of economic prosperity,” he said.


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