Eurozone crisis to hit Philippines in 2012
But Fitch says liquidity to cushion impactBy Michelle V. Remo |Philippine Daily Inquirer
Fitch Ratings said Asian countries, including the Philippines, will still feel the pinch of the eurozone debt crisis in 2012 but stressed that the impact would remain manageable given significant demand and liquidity in their domestic economies.
In one of its latest reports, Fitch said export incomes of Asian markets would remain adversely affected by the sluggish demand in Europe but expressed optimism that rising demand among Asian countries should partly compensate for it.
In September, Philippine exports fell by 27 percent to $3.87 billion from a year ago amid anemic demand from the United States and Europe, which are key export markets for goods from the Philippines and other emerging Asian economies.
The healthier economies in Asia is the reason policymakers in the Philippines are urging the country’s exporters to tap more markets within the region and reduce dependence on Western economies, like those in Europe, for sale of their goods.
The credit rating firm likewise said sufficient liquidity in the financial markets of many emerging Asian economies, such as the Philippines, gives comfort that corporate entities would be able to raise funds when needed.
Moreover, Fitch said that most large Asian companies, led by publicly listed ones, have registered favorable income performance over the past year and, as such, have less need to tap the international financial market for funds.
“The second way the eurozone crisis could affect Asian corporate [entities] is access to funding. However, most Asian corporate [entities] are in a stronger position now than they were going into the 2008 downturn,” Fitch said in the report titled “Asian Corporates’ Exposure to Eurozone Is Manageable.”
In the case of the Philippines, the economy grew by 4 percent in the first semester from a year ago. This was a slowdown from the over 8 percent registered in the same period last year but is better than growth rates of industrialized countries.
The slowdown was blamed on lower-than-programmed public spending and anemic demand from industrialized markets that pulled down the country’s export earnings.
Growth of the country is aided by domestic demand, which in turn is partly fueled by remittances. Sustained growth in domestic demand keeps the positive outlook of corporate entities in the country, economists said.
Most forecasts say the Philippines is likely to maintain a growth in the 4-percent territory in 2012.