Philippines seen to weather external headwinds

MANILA, Philippines - A professor from Columbia University said the Philippines would be able to survive external headwinds brought about by the impending interest rate hike in the US as well as the uncertainties brought by a Trump preisdency.

Arvid Lukauskas, executive director of the Picker Center for Executive Education and the program in Economic Policy Management at the university’s School of International and Public Affairs, said the sound macroeconomic fundamentals of the Philippines would help fend off external shocks.

“Emerging markets unlike the past, I think investors have been more discriminating about where they pull out their money. I think the Philippines has experienced a period of relatively fast and sustained growth for a number of years, I think it is widely seen as good place to invest right now,” he said.

The economy grew 7.1 percent in the third quarter from seven percent in the second quarter making it the second fastest growing economy in the region after India’s 7.3 percent.

Likewise, he said the Philippines has enough gross international reserves (GIR) to survive the continued outflow of funds from emerging market economies and to defend the peso.

In a press briefing organized by the Investor Relations Office (IRO), Lukauskas said outflows are not going to be sudden or terribly dangerous.

“What we see when world events have led to outflows form capitals form emerging market, investors have been more discriminating where they pull out their money,” he said.

Data from the Bangko Sentral ng Pilipinas (BSP) showed the Philippines recorded a net inflow of foreign portfolio investments or hot money of $1.33 billion in the first 10 months, a complete reversal of a net outflow of $360.4 million in the same period last year.

Just like the global financial crisis in 2008 and the tapering off of stimulus packages, Lukauskas said emerging market economies including the Philippines survived the magnitude of outflow of funds.