THE PHILIPPINES SHOULD CLOSELY monitor developments in Japan as a potential double-dip recession in the world?s second-biggest economy poses threats to the Philippines? growth prospects, according to Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr.
In his first public appearance since his heart surgery in February, Tetangco said before members of the thrift banking industry that the risk of Japan falling into another recession should not be ignored because of the strong country?s economic ties with the Philippines.
Japan is the Philippines? second largest export market next to the United States. Japan is also the Philippines? biggest source of official development assistance and a major source of foreign investments.
?We have seen signs of [global] recovery but everything is not well yet. Recovery is fragile; Japan may suffer a double-dip recession,? Tetangco yesterday said during the annual convention of the Chamber of Thrift Banks.
He stressed though that the macroeconomic picture for the Philippines was still ?quite good,? saying the economy was on track to meeting the official growth target of between 2.6 and 3.6 percent this year, and that inflation was seen to remain well within the range of 3.5 to 5.5 percent.
Still, he said global economic developments need to be closely watched.
According to the National Statistics Office, Philippine merchandise exports to Japan amounted to $580 million in January 2010. The amount accounted for the biggest share of 16.2 percent of total export income of the Philippines during the period.
Meanwhile, the latest ODA review conducted by the National Economic and Development Authority showed that outstanding loans from the Japanese government to the Philippines stood at $4.7 billion as of end-2008, higher than the $1.8 billion from the Asian Development Bank and the $1.5 billion from the World Bank.
ODAs are normally used to finance infrastructure and other developmental projects.
?Whatever happens to Japan may have an impact on other economies. In the case of the Philippines, Japan is a major trading partner, investor, and provider of ODA,? Tetangco said.
