Economist deems political noise as an economic risk

CEBU, Philippines – The Philippines should watch out for the political noise brewing from various political issues here as investors are paying attention to them, an economist said.

Euben Paracuelles, senior economist for Southeast Asia at Nomura Securities Co. Ltd., said political noise is deemed a risk for the country.

"Politics is something [the Philippines] should watch out for. The Philippines, from a negative standpoint, has been getting a lot of headlines and the political noise associated with that is being — investors are paying attention to it," Paracuelles said in an interview on Friday at the sidelines of the ASEAN finance and central bank meetings in Mactan, Cebu last week.

However, the Nomura economist emphasized that this risk is "probably low at the moment" as far as its economic impact is concerned.

"For Philippines' case I would always argue that we have to think of politics' dynamics separately from the economics," he said.

While politics may have some impact on investor sentiment, Paracuelles said that seeing from economic perspective, the government is looking to increase infrastructure spending and doing some reforms.

"As long as the government's infrastructure drive and reforms make progress, they should remain very supportive to the overall economic outlook of the Philippines," the Singapore-based economist said.

In an earlier separate interview, Karby Leggett, Asia head of public sector at Standard Chartered Bank Singapore, said that in general, "politics are always an aspect that investors look to but its not the most important."

He believes investors are not deterred by politics for the most part.

In its latest projection, Nomura expects Philippines gross domestic product (GDP) growth at 6.3 percent this year, slightly slower than the actual revised 6.9 percent economic expansion last year.

But this is still deemed faster than the expected growth of its Asian neighbors.

The government targets GDP growth for 2017 to be within the 6.5-7.5 percent range, following the strong growth last year, which was among Asia's fastest. — (FREEMAN)