SINGAPORE -- The Philippines is the most vulnerable economy in Asia after Vietnam, as rising prices and a global slowdown threaten the country's ability to pay for its ballooning trade deficit, an HSBC economist said.

Philip Poole, HSBC's chief economist for emerging markets, said the Philippine central bank was behind the curve in taming inflation at a nine-year high and that the threat to the economy was exacerbated by waning competitiveness of exports.

"It's clear that the Philippines is becoming more vulnerable because the trade deficit is widening there and the ability to finance it is falling," Poole said.

"But is it going to turn into a Vietnam? No, (I) don't think so."

The Philippine peso has weakened 7.9 percent against the US dollar this year, but has appreciated 19.2 percent since the end June 2006.

Vietnam is struggling with a trade deficit that has tripled this year, a weakening fiscal position, limited foreign exchange reserves and annual inflation at a 25-year high, leading some observers to point to a currency crisis.

The struggling US economy will also take a toll on remittances from Filipinos working in the United States, Poole said. He said up to a quarter of Philippines' remittances come from the United States.

Remittances are a cornerstone in the Philippine economy because they boost domestic consumption.

The Philippine trade deficit this year is set to expand by a third to about $11 billion, the highest in at least nine years, due to higher fuel and rice imports and weaker exports, central bank documents showed on Wednesday.

The Philippines is planning to cut its 2008 export growth forecast to 5.0 percent from 6.0 percent, and raise its growth estimate for imports to 10 percent from 7.0 percent, official documents showed earlier this month.