CEBU, Philippines - While the Philippines showed strong economic fundamentals amid the global financial crisis and performed as one of the fastest growing economies in Asia and in the world, a top official of an insurance firm noted that the country has to consider wise strategies to keep the economy stable and sustain the success in the years ahead.
Philam Life president and chief executive officer Rex Ma. A. Mendoza cited this observation during the company’s annual wealth management forum in Cebu.
In terms of the global market outlook, Mendoza said that Europe is struggling against weak retirement, high unemployment and stronger commitment to maintain Euro integration.
China, on the other hand, is expected to stabilize with its economic indicators such as manufacturing, exports and retail while promoting reforms and benefitting people’s livelihood.
He also said that the US growth remains fragile but has shown signs of picking up particularly in terms of consumer spending and the housing market.
He added that the US government has to come up with long-term solutions as fiscal risk remains.
Unlike in the Philippines wherein Filipinos have matured politically, he said that the US economy has experienced a downgrade due to a dysfunctional and unsound political system.
“People here in our country do what they need to do. They are detached from whatever issues the politics has. Good economic growth means good governance. Credit goes to the Aquino administration. People are looking at the Philippines now but that is not yet enough,†Mendoza stated.
He then cited that Philippines also has established a foothold of major economic fundamentals such as stronger balance sheet, foreign inflation outlook, growth of corporate income that is believed to be faster than GDP, continued expansion of large-scale businesses using cheap money and effective management of fiscal and monetary policies.
He added that the resilient local economy remains to be robust which is fueled by robust overseas Filipino workers remittances, exports, furniture, public consumption and government spending.
He further noted that the business process outsourcing industry in the country is expected to grow by 18 percent in revenues by 2016 given the large pool of human resources and the increasing young population.
While BPO revenues are projected to match OFW remittances in 2016, the manufacturing industry in the country is also projected to grow higher.
The country expects similar upgrades by the two other ratings agencies that include Moody’s Investors Service and Standard & Poor’s Ratings Services to follow the recent investment grade status given by Fitch Ratings.
Mendoza pointed out that the Philippines has to work out on strategies to achieve sustainable economic growth despite global risks.
He said that the country has to maintain a healthy debt and GDP rates, has to shift portfolio investments to foreign direct investments that will drive infrastructure and business development, has to realize the projects from public-private partnerships and has to concentrate on the stronger growth in manufacturing and industrial areas as the services sector may not entirely sustain the economic growth.
“Low interest rates can create asset bubble if the platform for future growth is weak. We will be having a rough ride. But remember, wealth is built up and accumulated with right strategies not with the environment. We can never manage the waters but we can manage our ship,†he said, adding that key success factors include value, selectivity and flexibility.
He noted that developments to watch out for include structural reforms in governance, execution of policies in critical areas such as taxation and mining, May 2013 elections, US politics and fragile recovery, and European fiscal and monetary discipline.
He also said that the country could also expect the year of the Water Snake to be a year of education, technology, research, volatility, networking, travel, expansion of interpersonal relationships and communication.
Mendoza then advised the public who want to take advantage of the remarkable economic growth to invest in a diversified portfolio that could help beat inflation and achieve their financial goals in the long run. /JOB (FREEMAN)