Phl can weather volatility – int’l banker

MANILA, Philippines - The Philippine economy is strong enough to weather the market volatility being experienced by its neighbors in the region, an economist of global investment bank ING said over the weekend.

“The Philippines is less vulnerable to contagion than its SE (Southeast) Asian neighbors because it has a stronger external payments position,” Tim Condon, ING’s chief economist for Asia, said in a research note.

At the same time, he noted “(Remittances from abroad) sustain a comfortable current account surplus and the trade deficit is narrowing.”

Condon said the country will not be a source of crisis in the region but it may not be spared from a contagion if a balance of payments (BOP) crisis breaks out.

“The Philippines is not going to be the source of a balance of payments crisis. However, if a BOP crisis breaks out elsewhere, the Philippines won’t be spared,  no economy in Asia excluding Japan would,” Condon said.

The BOP shows a country’s transactions with the rest of the world. Its components include remittances, exports and imports, and investments, among others.

Aside from problems experienced by the region, capital flight in emerging markets is also being driven by the US Federal Reserve’s impending tapering of its massive bond buying program.

“The combination of investors’ worries on some emerging markets’ economic numbers and the expected withdrawal of the US Fed monetary stimulus are working against emerging markets,” Antonio C. Moncupa Jr., president of East West Bank, said in a separate comment.

 â€œIf this continues, interest rates, not only in the US but likewise in emerging markets maybe adjusted upwards. The latter as a defense against deteriorating currencies,” he continued.

Moncupa said that while the Philippines’ macroeconomic fundamentals remain strong, the country may still see volatility due to what’s happening in the region.

“While arguably, the Philippines is in a better position than many emerging markets, I guess this is a case of low tide grounding most ships. But ships that are in better condition should refloat when the tide turns, as it would,” Moncupa said.

“In the meantime, it would seem that volatility will be with us,” he added.