'RP doing well amid global crisis'

Despite fears of how the US recession and the global economic crisis will affect the Philippines, the country is doing well and is expected to remain strong along with other Asian nations, according to a top industrialist.

Businessman Jaime Augusto Zobel de Ayala, in a talk before a roomful of business executives in Makati City yesterday, said sets of statistics, with all things considered in relative terms, reveal that the present situation does not look bad.

He explained that though exports and foreign direct investments are slowing down, these have never been key drivers of the Philippine economy and are “not really affecting the country in a significant way.”

“It’s really the export-related countries in the region that’s beginning to feel some of the pain from this contraction taking place in demand globally,” Zobel de Ayala said.

“But in the country, that can be seen as a good and a bad thing, but we’ve never really been a strong exporter. Foreign direct investments have never been a major driver in the economy, it’s been the domestic consumption. The slowdown in exports and foreign investments in the region is not, in relative terms, having that effect on us,” he stressed.

Zobel de Ayala noted that the Philippine economy on the other hand is very dependent on overseas Filipino worker (OFW) remittances.

And though newspapers are pointing out that this is slowing down, it is still growing at an acceptable rate which, combined with the depreciation of the peso, actually gives Filipinos more spending power.

He also pointed out that the country’s international reserves are at a record high believing that “a lot of credit has to be given to our Bangko Sentral and the policies it put in place that is giving us this kind of cushion in very difficult times.”

“Inflation that increased in a frightening way at the beginning of this year is actually beginning to come down again in a fairly aggressive way. Our financial system is actually quite stable and intact and Gross Domestic Product continues to grow,” he said.

Zobel de Ayala, who was asked to speak on the topic of Cheer Amidst the Gloom in celebration of how the business sector has been helping poor Filipino kids through the Children’s Hour project, said Pinoys are doing quite well despite the global economic storm.

According to him, increase in dollar remittances and the depreciation of the peso along with the lowering prices of food and oil are actually not a bad mix.

“While am not saying that it’s really rosy out there, we’re not seeing the kind of terrible declines that you’re getting in the developed world,” he said.

He further cited how Philippine banks are not too leveraged and have not been having any major problems lately as proof of how the banking sector is quite intact.

He said the Philippines is one of the very few countries that did not have to increase bank deposit guarantee levels above P250,000, which is “extraordinary.”

In general, Zobel de Ayala said Asian countries including the Philippines have a healthy macroeconomic position and that the economic fundamentals in the country remain sound.

Makati Business Club (MBC) executive director Alberto Lim, who attended the gathering which sought to raise more funds for the Children’s Hour program, agreed with his position.

“The Philippines and Asian countries are better off than developed economies. At least there will be positive growth next year,” he told The STAR.

Lim however noted that growth in 2009 will be lower than 2008 and the situation could get worse if government does not intervene in a positive way on the spending aspect.

“On the revenue side, it should not lower Value Added Tax (VAT) in order to stimulate economy since this could lead to bad old days of fiscal instability,” he said.