BSP Governor Amando Tetangco Jr.: We still have the pull. INQUIRER FILE PHOTO
The Philippines still has what it takes to “pull” investors from overseas to put in money in the country despite the recent volatility in financial markets that have seen most fund managers returning to traditional safe havens.
Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas (BSP) said factors such as low-yields and slow growth in advanced economies were reversing. However, he noted that countries exhibiting stable growth like the Philippines remained attractive destinations for investors.
“The push factor at the time was low interest rates and sluggish economic growth,” Tetangco said, referring to global economic conditions that saw investors flocking the Philippines in the first half. “But now that there are signs that the US economy is recovering, that push factor is beginning to diminish. But we still have the pull.”
He noted that that the Philippines had Asia’s fastest-growing economy in the first quarter of the year and that inflation remained low. Low inflation means better returns for investments denominated in peso since yields are not offset by the price increases.
Tetangco said the country also continued to enjoy robust foreign exchange income in the form of remittances from overseas Filipino workers (OFWs) and from the business process outsourcing (BPO) sector and the tourism industry.
“Our external position remains in surplus and our fiscal position continues to improve,” he said, pointing out that these would help the country weather volatile market conditions as foreign money in local stocks, bonds and government securities get repatriated to markets like the United States. Despite the sudden flight of investors seen in the latter part of June following signals of an end to the US Federal Reserve’s bond-buying program, the country continued to enjoy net “hot money” inflows for the first half.