PH ‘different’ from troubled Asean peers, say reports



The Philippines, Southeast Asia’s fastest-growing economy, can differentiate itself from its regional peers that are grappling with slowing growth and deteriorating external balance sheets, based on a common theme cited by international researchers in the past few days.

Although election spending was a factor behind the better-than-expected 7.5-percent gross domestic product (GDP) growth of the Philippines for the second quarter, a pace matched only by China, some of the reports cited some downside risks.

“The local economy’s resilience in the face of external turbulence reinforces our view that the Philippines is somewhat differentiated from its peers not only by having a structural current-account surplus but also by having local growth drivers, mainly public spending and private investments, to lean on. The latter may be traced to local economic authorities’ ability to pursue accommodative policies given a benign inflation outlook and manageable public debt,” New York-based think tank Global Source said in an Aug. 30 commentary written by Filipino economists Romeo Bernardo and Marie-Christine Tang.

In a separate research, Credit Suisse said: “We think the Philippines offers the best macroeconomic prospects out of the Asean-4 economies,” referring to the four emerging markets of Southeast Asia that also included Thailand, Indonesia and Malaysia.

“While the recent correction in regional Asean equity markets has no doubt impacted the Philippines equity markets, with the local equity market correcting by close to 14 percent in August, it is important to differentiate the Philippines from the other Asean-4 countries,” said the Credit Suisse report written by Michael Wan.

British bank Standard Chartered, in an Aug. 29 commentary, said that while Philippine markets were expected to remain volatile in the short term due to concerns on the tapering of the US Federal Reserve’s monetary stimulus, volatility would likely have “limited” effect on long-term Philippine economic trends.

“The Philippine has several strengths relative to its Asian peers. Solid domestic consumption and investment are likely to support growth in the next three years,” Stanchart said, adding that the economy ranked favorably based on Moody’s External Vulnerability Indicator, indicating its resilience to external shocks.

“In addition, strong remittance inflows from overseas workers more than make up for the trade deficit in the current account,” the bank said, noting that the 2012 current account surplus of 2.8 percent of GDP would have been a deficit of 4.3 percent if overseas workers’ remittances were excluded.

But Global Source, in the report titled “Differentiated,” noted that the pace of growth in the Philippines might fall below 7 percent starting this quarter due primarily to the disappearance of election-related stimulus and its impact on government and household spending.

The think tank also cited some downside risks based on the economic numbers released last week, including a decelerating year-on-year consumption growth over the past four quarters; more timid spending by government moving forward in the wake of the unfolding multibillion-peso pork barrel scandal; dampened investor confidence due to recent financial market developments, as already reflected by the decline in business confidence in the latest quarterly survey by the local central bank, and weakness in imports, including inputs to electronics goods, making a convincing export recovery story still elusive despite improving growth indicators in the US and China.

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    All I care is that the data could be translated to more real jobs creations…that’s it!

    • lanceads

      It’s high time you put up your business to create some jobs…

    • ilove_us

      Simple lang ang sagot dyan! Tayo mismo mga pinoy tangkilikin muna ang sarili nating mga produkto para maka pag-massive production tayo kung ano meron tayo.

  • Tagabukid2

    We will never achieve our full potential until we build up a strong industrial sector in our economy.

    China’s cheap import are undercutting local entrepreneurs prices of their locally made goods. Why manufacture here when China is dumping all their substandard goods at very low prices?

    If we can only reignite industrialization in this country like they did in Korea and Taiwan, we will be real achievers in this part of the world.

    • JohnDoeGB

      I agree but I am more into Industrialization with conscience so that mother nature will not suffer – less issues with environmentalist (law suits, TRO, protests, etc.), not aggravating weather disturbances, and no health risks to all of us.

      • Tagabukid2

        But of course!

  • Lara_MZ

    Doris, I agree with you that the Philippines is in a stronger position than India, Indonesia and Thailand. Structurally, the OFW remittances and export services (outsourcing) provide a strong and stable economic base. But we are vulnerable.

    The extra zing that will help the country maintain its 7%++ growth: the riddle of our stagnant manufacturing sector needs to be solved. Until our power generation and distribution enables lower cost, there must be a financial incentive through fiscal policy that will make our manufacturing sector cost competitive. We need this sector to make the growth inclusive to non-college graduates. I have not heard of any game-changing policy coming from the Administration.

    There might be headwinds in the property sector brewing underneath off-balance sheet. Our domestic banks’ balance sheets reflect compliance with 20% downpayment on mortgages. However, the 20% downpayment is lent by the developers themselves who also tie up with banks to provide and service that loan. It’s an off-balance SPV entity.

    Some of our countrymen’s balance sheets might be weaker too with respect to mortgages and consumer loans. There was no rise in income but there was a rise in personal loans. They have levered up. Personal bankruptcy is just a few bps away
    from a rise in interest rates.

  • gisingpinas


  • carlcid

    OFW’s and the Filipino taxpayer are the primary heroes of the Philippine economy.

    OFW’s have been propping up the economy for several decades. OFW remittances were vital during the early ’80’s, after the economy was devastated when the Philippines declared a debt moratorium. Through the early ’90’s, when earthquakes, volcanic eruptions and Cory Aquino’s ruinous policies brought about the infamous rolling blackouts which caused the economy to spiral downward. Then came the Asian Financial Crisis of the late ’90’s and early 2000’s, where OFW remittances helped to ease the economic crunch. And, during the GMA administration, OFW remittances helped to keep the economy on an even keel, oblivious to the unrelenting stream of scandals.

    The Filipino taxpayer, too, has been doing his heroic part to prop up the economy. Taxpayers have stoically shouldered all sorts of taxes and tax hikes that government has burdened them with. There was the VAT, then the expanded VAT, then the recent hike in sin taxes, hikes in corporate taxes, hikes in property taxes, energy taxes, gasoline and fuel taxes, road user’s taxes, taxes on vehicles, taxes on insurance policies, taxes, taxes ad nauseum. So much so, that credit rating agencies have taken notice and have given the Philippines “investment grade” ratings. All thanks to the Filipino taxpayer, and no one else!

    And, yet, OFW’s and taxpayers are the most abused among Filipinos. OFW’s are exploited by government agencies, middlemen and employers. They are even molested at our embassies. Taxpayers get no relief, only harassment from the BIR, which keeps prodding them to relinquish even more of their hard-earned money to the government. Money which eventually is misused and pocketed by crooked government officials and legislators via pork barrel and other scams.

    The Philippines has a very strange way of punishing its true heroes while, at the same time, rewarding con men and scoundrels with positions of authority and allowing them to help themselves to the people’s hard-earned money!

    • tilney

      OFW’s main role in our economy is the monthy USD remittance that help our country to prop up our foreign reserve and their families domestic consumption say 70-80 % of the amount of their remittance that help most of our local industries and importers , from construction, to shopping malls.

      Govt do not earn from personal income tax as salaries earn abroad are tax free only the 12 % VAT whenever their family spend on goods and services say 50% of USD 20 Billion yearly x 12% =USD 1.2 Billion

      Govt cannot provide the services if people will not pay income tax or not spend money on goods and services where govt get 12 % VAT .These taxes goes to education, health, LGU, Defense , Social Services and others including the corrupted PDAF.
      We can only pray that govt we had would spend the hard earn taxes wisely..

      It is our duty not to sell our votes to crook politicians , simple us that if we do not want to get such personalities. We voters have that obligation to see that we have straight forward politicians

      • carlcid

        Filipinos have the right to demand a better and more transparent system than the one we presently have. The pork barrel must go, including the SPF!

  • johndoe_phil

    E kulong or pwede e firing squad ang mga senatong and tongressman na sangkot sa JLN scam.

  • neverwint3r

    if not for corruption, the philippines should have overtaken these countries malaysia, thailand and indonesia decades ago. right now, the economy is ofw-driven, with around 20% of the population working abroad.

    filipinos shoiuld learn to vote wisely. the patronage politics, padrino system, and political dynasties all promote corruption in government.

    • Ramil Abalon

      right and even china…our vast resources is 10x or more than our population and our natural resources is more classic as compare to other country

  • spiritnsoul700

    The Ofws remittance is only second to Money laundering , don’t you guys know that the Philippines is Asia base when it comes to money laundering.

    Millions dollars transaction take place weekly and this is something that the government hides the truth..

    The 7% growth is a marketing strategy to try hard to attract foreign investors to invest in the Philippines, which has failed miserably. As long as foreign policy on business does not change but favuor only the host, nobody wants to invest in the Philippines, The business policy of the Philippines is a daylight robbery/thug. They only want your money, and you are not going to get a single dollar. They manipulate and squeezed you dry
    Only crooks smugglers criminals syndicates will continue to invest in the Philippines,

    The so called investment activities of these syndicates many using office front as disguise has now spread its wings across the Philippines

    • ofwme2807

      talking non-sense and no basis….

  • rodben

    Thailand, Indonesia and Malaysia are less corrupt gov’t and lower Overseas workers to buy a properties and spend in shopping compared to Philippines all Politicians are corrupt easy to have five unit of condo and everyday shopping and good time in any resorts plus the 17million OFW’s around the earth Planet…

    • ofwme2807

      have you been to these countries and what is your basis for saying this???

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