MANILA, Philippines—The Philippines is not in danger of falling into a recession. In fact, it is the only country in Southeast Asia that has so far escaped the harsh impact of the global financial turmoil, European banking giant Deutsche Bank said Wednesday.

In an equity research note, the German bank said the Association of Southeast Asian Nations as a bloc was far more resilient today than during the Asian crisis of the late 1990s, when the sharp economic slowdown and unprecedented currency devaluation triggered a wave of corporate defaults that in turn soured banks' assets.

“While the collapse in commodity prices and the anticipation of weaker exports should hurt economic growth, DB is not expecting a recession in Indonesia, Malaysia, Thailand or the Philippines,” the report said.

But the bank warned that currencies in the region would continue to face pressure as offshore investors shy away from smaller emerging markets.

“Thailand is dealing with an almost self-imposed credit crunch and Malaysia is trying to fund a higher-than-expected fiscal deficit; only the Philippines seems relatively unscathed so far,” DB said.

It added that Singapore was so far the outlier in the region, as a recession or at least two quarters of negative growth, may be inevitable in 2009 given the city-state's sensitivity to global economic growth.

But with the exception of Singapore, DB said Asean banks have had negligible exposure to US subprime mortgages or structured products.

“Financial prudence, deposit guarantees by central banks and the general lack of exuberance in the mass residential property market has left the Asean bloc in far better shape today than before the Asian crisis,” DB said.

But despite the strong fundamentals, DB said the magnitude of stock market declines across the region was no different from those in North Asian markets, where economies were now grappling with significantly more risks.

DB added that Asean corporate balance sheets remained relatively healthy. “And there appears to be a surprising sense of calm in the real economy,” it said. But it added that earnings and currency risks remained high, especially in Thailand and Indonesia.

The Philippine government, for its part, has scaled down its growth outlook for this year and next year but projected a positive growth.

The inter-agency Development Budget Coordination Committee now expects the domestic economy to grow at a slower pace of 4.1-4.8 percent this year and 3.7-4.7 percent next year. It was earlier projected that domestic growth would be within 5.5-6.4 percent this year and 6.1-7.1 percent next year.

With the change in the growth target, the government revised the programmed budget deficit for 2009 to P102 billion from P75 billion this year, to provide room for fiscal spending to boost the domestic economy.

The government has also adjusted its peso-dollar exchange rate assumption for next year to 45-48 from 42-45 this year.

Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo said the changes in growth targets were broadly consistent with the projection of the International Monetary Fund of a slower growth of 2.2 percent for the global economy next year, likewise downgraded from an earlier forecast of 3 percent.

When growth in global output falls to 3 percent or below, the IMF considers it a global recession.

For the Southeast Asian region, the IMF is now projecting a growth rate of 4.2 percent for 2009.