PH strengths ensure growth despite external woes, BSP says

The Philippines has “domestic sources of strength” that will help it continue weathering the effects of the debt crisis in the eurozone even if the problem might worsen given speculations about Greece’s possible exit from the European Union.

This was according to BSP Governor Amando Tetangco Jr., who said the adverse impact of the eurozone crisis on the Philippines was “like a pain in the shoulders.”

“You can feel it, but it cannot cripple you,” he said.

Tetangco said favorable macroeconomic indicators would help the Philippines maintain economic growth even if the crisis in the West would persist in the short to medium term. These indicators that serve as the economy’s “sources of strength” include the government’s improving fiscal position, the higher foreign exchange reserves, benign inflation and a business-friendly interest rate environment.

“The problem in the eurozone will remain. But the impact on the Philippines at this point in time is something that the country can absorb,” Tetangco told reporters.

Tetangco said the declining debt burden of the government gave it the flexibility to spend for stimulus measures if the need to boost the economy would arise.

The Philippines’ high foreign exchange reserves level, he said, should help keep investors confident in the country’s ability to service its debts. Tapping the international capital market, Tetangco said, should not be a problem for the Philippines in the event additional stimulus funds would be needed.

Benign inflation and interest rates, which make the cost of doing business in the country affordable, should also help keep investors’ confidence in the country even if global risk aversion would remain high.

Economists said the Philippines and other emerging markets were affected by the debt crisis in the eurozone in terms of remittances, trade, investments and financing.

According to the BSP, money sent by overseas Filipino workers based in the eurozone account for about 16 percent of total remittances sent to the Philippines.

Exports to the eurozone account for about 12 percent of the country’s total export earnings.