Phl is top economic performer in region – Asean research

YOKOHAMA – The Philippines is “the top economic performer” in the region and the Duterte administration does not pose political risks that might make the country less attractive for investments, according to the ASEAN +3 Macroeconomic Research Office (AMRO).

The Singapore-based international group, which released here yesterday its inaugural flagship report on the economic outlook for the Association of Southeast Asian Nations (ASEAN), China, Japan and South Korea, is projecting regional gross domestic product to grow at 5.2 percent this year, with inflation under control despite global economic uncertainty.

AMRO chief economist Hoe Ee Khor, in a briefing on the report, was asked if there were factors that could alter the group’s projections for the Philippines.

“The Philippines is the top performer (in the region),” he said. “It is a very attractive destination for investments.”

Asked if he saw political risks from the new government of Rodrigo Duterte, Khor replied, “So far, not much... growth will continue.”

The risks for the country are mainly external, Khor said as he noted that the economy is heavily dependent on overseas workers’ remittances and business process outsourcing. Global economic growth has slowed down, protectionism is on the rise and US President Donald Trump has vowed to bring back American jobs and “buy American.”

“But we’re pretty confident that growth can be sustained at a high level,” Khor said as he pointed out that the Philippines has built strong buffers and the country’s financial reserves are “relatively high.”

Inflation is picking up and the current account deficit may be a cause for concern, he said, “but this is a good current account deficit because it’s sustained by investments.”

Khor noted that the Duterte administration has sustained sound economic policies of the past and international credit rating agencies have maintained the country’s investment grade.

Risks, challenges for Asean + 3

The AMRO inaugural report is being released 20 years after the region was hit by the financial crisis. Khor said the crisis “shaped the trajectory” of regional growth.

He said growth never fully recovered, and one reason “is that the public sector got clobbered.”

This year, however, AMRO sees the economic outlook for ASEAN + 3 improving with a recovery in global trade and investment fueled by domestic demand. Regional integration is also benefiting individual economies, the group reported.

Khor stressed that “you can never be too complacent.” AMRO is urging governments to give priority to financial stability in balancing efforts for economic growth.

AMRO was created after the Asian financial crisis. Khor said the crisis led to reforms that imposed discipline in monetary policies, strengthened regulatory frameworks, built up reserves buffers, encouraged flexible exchange rates and fiscal consolidation and promoted reforms in the corporate and financial sectors.

The improved macroeconomic management and stronger foundations allowed ASEAN + 3 to survive the global financial crisis “relatively unscathed,” according to the AMRO report.

From 2007, the region also benefited from heightened regional economic integration, AMRO noted. Enhanced regional cooperation will improve resilience to shocks and pave the way for sustained relatively strong growth, it added.

Among the risks cited by AMRO for the region are trade protectionism, heightened financial volatility and tightening global financial conditions as well as inflation.

Khor, however, downplayed the impact of Trump’s promises to impose protectionist policies.

“We haven’t seen a lot of protectionist moves yet,” Khor said.

As long as such moves are “not too drastic” and regional economies remain open, integrated and vigilant, he said growth could be sustained.