MACTAN ISLAND, Cebu, Philippines – The Philippines is relatively isolated from the risks coming from external shocks due to the country’s sound economic fundamentals, officials from the International Monetary Fund and World Bank said.
In a briefing, Mitsuhiro Furusawa, deputy managing director at the IMF, said the Philippines is relatively isolated from the risks coming from China’s economic woes.
“The current Philippine economic performance is quite good. Compared with other neighboring countries, the trade relation with China is less,” Furusawa said.
“We think with the spillover effects, the Philippines will be less affected by the slowdown of the Chinese economy. We congratulate the performances and the good macroeconomic policy of the government,” he said.
China was the Philippines’ third largest export market last year following Japan and the US. The Philippines shipped $8.03 billion worth of commodities in 2014 to China, up 14 percent over 2013 levels.
At the same time, China was the Philippines’ largest source of imports last year with $9.57 billion.
The economy grew by a slower 5.3 percent in the first half from 6.2 percent in the same period in 2014. The latest figure is still far from the government’s goal of expanding the economy by seven to eight percent this year but it is already among the fastest growth rates in the region.
Odd Per Brekk, director of the IMF’s regional office for Asia and the Pacific, said the fiscal and monetary space would support the Philippine economy in times of need.
“In terms of financial situation and spillovers from shakes in financial markets internationally… we think that the Philippine (economy) is quite robust,” Brekk said.
“It has flexible and efficient policy, it has fiscal space, monetary policy space to respond… It has a current account surplus and [high] level of reserves so in general, we think it is quite well-placed to manage the spillovers,” he said.
A World Bank official, meanwhile, concurred the Philippine economy has been doing “very well” despite the soft global economic activity.
“It is fair to say that if you look at the overall economic management, the authorities have done a very good job in allowing for prudent macroeconomic policies that have ended up reducing inflation, reducing debt levels, as well as having an increase in international reserves,” Axel van Trotsenburg, World Bank vice president for East Asia and the Pacific said in a separate briefing.