Black Swan phenomenon won’t slow Phl growth – Philam Life

MANILA, Philippines - Despite of the Black Swan phenomenon descending in the Philippines last year, the Philippines is still marching towards strong growth, according to the top executive of the Philippine American Life and General Insurance Co. (Philam Life).

The Black Swan phenomenon is an extremely rare and unexpected event but resulting in extremely significant consequences, such as Typhoon Yolanda for the Philippines, which threatened to derail strong economic growth.

Philam Life president and chief executive officer Rex A. Mendoza said that the investment outlook remains strong, in spite of the stout start of the US economy early 2013 but weakly tapered off towards the end, and the Black Swan phenomenon in November.

The country’s gross domestic product (GDP) this year is still driven by increased consumption, post-Typhoon Yolanda reconstruction, evident sustained private construction and investment, and furious ramp-ups in public infrastructure spending.

The national government is forecasting between 6.5- to 7.5 percent growth rate this year, after a strong 7.2 percent rate last year. 

“Five years after the global financial crisis, the world economy is showing signs of bouncing back, pulled along by a recovery in high-income economies. And our country is in a ‘demographic sweet spot’ due to a prominent proportion of its population being of working age,” Mendoza said.

According to the United Nations, the current median age in the country is 22.2 years.

HSBC economists said that the Philippines is far from the imagined dystopian scenario, despite of a projected burgeoning population of 62 million.

They say that the earning potential of the populace will only serve to add to the nation’s income per capita, increase GDP by a factor of 15, and place the country among the top 16 economies in the world, advancing more than 10 spots by 2050.

The Philam Life chief executive urged the investing public to take advantage of growth opportunities and start investing as a means to improve financial health.

The World Bank recognized the Philippines as an emerging Tiger Economy following the government’s economic initiatives and political reforms.

Efforts have led to achieving the goal of investment grade rating from Fitch Rating, Standard & Poor’s, and Moody’s – all recognized global leaders in providing credit ratings, debt instruments and securities research and analytics – in March, May, and October, respectively.

Notching a 7.2 percent GDP growth in fiscal year 2013, the country was the best performing economy in Southeast Asia, second only to China, the world’s fastest growing economy.

Mendoza identified three life phases – man at work, man and his money at work, and finally a man’s money at work – as the main episodes of a person’s financial journey.

While earning money is the cursory answer to why people invest, beating inflation and achieving financial goals are the definitive reasons for sound financial planning. 

Mendoza said that clients have expressed growing interest in Philam Life’s many products. Getting a lot of attention is a life insurance policy that also doubles as an investment portfolio, also referred to as variable unit-linked (VUL), as the client’s insurance premiums are also deposited in high yield stocks. 

“It is about people’s dreams and their realizations within a certain lifetime,” said Mendoza. “You fulfill the dreams of your life at the right time. Luxuries very early in life will give you sacrifices in the end. Sacrifices early will give you luxuries in the end.”

Philam Life is one of the leaders in the life insurance industry in the country, reporting gross premium sales of over P15.3 billion in 2012. It has a bancassurance partnership with the Bank of the Philippine Islands (BPI), which allows Philam Life advisers to sell insurance products through the bank’s over 700-branch network.