The Philippines is less sensitive to shocks and is poised to maintain a positive growth trajectory this year, despite current volatilities in the global economy, government economic managers said over the weekend.
The World Bank revised downward its growth projection for the world economy this year to 2.4 percent from an earlier estimate of 2.9 percent.
Finance Undersecretary and chief economist Gil Beltran said despite the weaker global economic prospects, the country remained on a positive growth trajectory.
“Strong macro-economic fundamentals have been instrumental in buttressing the Philippine economy and will continue to do so in the face of volatilities and increased uncertainty,” Beltran said in an economic bulletin.
The World Bank confirmed that the Philippines was among the few economies in Asia with a strong growth potential. It said gross domestic product in the Philippines would grow 6.4 percent in 2016.
Beltran said macro-economic management enabled the country to embark on fiscal deleveraging and create wider fiscal space, build sizable reserves and minimize exposure to foreign debt, stabilize prices and strengthen the banking system.
“These developments will afford fiscal and monetary authorities ample room for maneuver and, to some extent, provide insulation for the country from external shocks as they arise,” Beltran said.
Economic Planning Secretary Arsenio Balisacan said in a separate event the slowdown in China was “long overdue”.
“It’s long over due for China. I expected it to slow down a decade ago. It is bound to come. We did not expect that it would as quick as it is right now,” Balisacan said.
He said the impact of the economic slowdown in China would affect the country through trading partners such as Malaysia and Singapore.
Balisacan said that despite the volatilities, the Philippine economy was poised to adapt to changes.
“The good thing about the Philippines is we structured the economy as to change a lot. If you look at the position of the current account, [it is] so diverse it makes us less sensitive to any shock in a particular region of the world,” Balisacan said.
“Ten years ago when you look at our dollar earnings, 70 percent of that is just from two commodities—semi conductors and conductors. But if you look at our current account now, big part of that is remittances, even better part of that is the exports in remittances. [As for] foreign exchange, it’s much more diverse. Even merchandise exports and services exports continued to be robust. Overall, when you put our exports together, it’s still a positive growth,” Balisacan said.
He said that the weakening of peso against dollar could also be a positive sign. “Well, I always say that for so long as the changes in the exchange rates are not sharp, an improvement in the exchange rate, the slight deceleration, depreciation is actually good for the our tradable exports, the imports industries and to our workers who depend in remittances. So the depreciation not only increases purchasing power of a big number of our population but also the competitiveness of our industries whether they are for exports or competing or substituting products,” he said.
Budget Secretary Florencio Abad also said the Philippines had two strong predictable drivers from the foreign exchange volatilities.
“As I’ve always said we have two very strong predictable drivers that have insulated us from forex volatility. We have the OFW [overseas filipino workers] remittances and BPO [business process outsourcing] revenues plus the facet that internally we continue to grow at 6 percent compared to the rest of the world is robust,” Abad said.