Recovery of US, Japan bodes well for Phl, says Purisima

MANILA, Philippines - The recovery in the economies of the US and Japan bodes well for the Philippines’ own economic expansion in the long run, the government’s top economic official said.

 â€œWe are trying to insulate ourselves from the things we cannot control,” Finance Secretary Cesar Purisima said during the Philippines Investment Forum yesterday.

The US – the world’s largest economy – has shown signs of recovery lately with the unemployment rate hitting a four-year low of 7.7 percent in February, suggesting consumer demand may support a faster economic expansion this year.

Japan, on the other hand, has tried to boost its own economy by maintaining low interest rates and begin asset purchases next year. The goal is to stem deflation – a decrease in consumer prices – that prompt consumers to postpone spending.

Both scenarios have their own benefits and consequences, Purisima said, but in general the government would want “to look at the positive side of things.”

For the US, a recovery may provoke some outflows from emerging markets such as the Philippines, something the Bangko Sentral ng Pilipinas (BSP) is ready to deal. Purisima is a member of the BSP’s policymaking Monetary Board.

 â€œWe’ve been structurally prepared for that,” he said.

For Japan, while an easy-money policy has sent inflows to developing markets such as the Philippines, thus contributing to recent peso highs, focus should be given on the possible long-term implications.

A return of growth in Japan – which has been battling falling prices that resulted in recession – “augurs well” for Philippine export growth. Japan is the country’s largest export market.

 â€œGrowth in Japan will mean more company activity. The more Japanese companies consume, hopefully that will translate to better trade growth for us,” Purisima explained.

In the mean time, Purisima said he is hoping large amount of inflows swamping the country could be put to better use by financing infrastructure development, for instance.

“The goal of the president is really inclusive growth. He wants to make sure that every Filipino, given the opportunity, is to actualize their potential,” he said.

“The way to do that is higher and higher growth but at the same time Investing in sustainable foundation,” he added.