Philippine Economy Continues Strong Growth, Says Industry Experts

The American Chamber of Commerce of the Philippines (AmCham) held a general membership luncheon meeting to discuss the economic outlook of the Philippines last April 26, 2017 at Dusit Thani Manila in Makati City. The featured speakers were Mr. Cezar P. Consing, President and CEO of the Bank of the Philippine Islands (BPI), and Mr. Robert L. Panlilio, Managing Director and Senior Country Officer of JP Morgan Chase. Carol Dominguez, John Clements Consultants President and CEO, attended the event.

Mr. Panlilio was the first speaker and he began by presenting the general climate of the ASEAN-5 countries, namely Malaysia, Indonesia, Thailand, Singapore and the Philippines. Economic metrics show relatively favorable growth dynamics for the Philippines, with a 6.5% GDP growth in 2017. Indonesia comes in second with 5.3% while Singapore falls in last with a 2.0% growth rate. Compared to other ASEAN member countries, the Philippines has the least reliance on foreign trade and commodities — with a trade balance of negative US$30.7bn — which acts as a buffer against external shocks.

Banking statistics among the ASEAN-5 countries show that the Philippines is poised to grow the fastest with assets totaling 15.3% compared to Indonesia’s 12.4% and far from Thailand’s 5.2%. The Philippines has more than adequate reserves along with a good loan deposit ratio. Other countries’ credit metrics and overall capitalization partly explain the relatively conservative growth in the industry.

Meanwhile, compared to its neighbors in Emerging Asia, the ASEAN-5 countries have modest loan-to-GDP ratios. The Philippines fares well with a good loan deposit ratio of 61%, although this still leaves a lot for loan growth.

Key themes

Mr. Panlilio then talked about the key themes of the ASEAN-5 member countries, with the Philippines, in particular, leading economic growth with modest inflation, driven by strong investments from the BPO industry and OFW remittances. The good news is that the current presidential administration is focusing on strong infrastructure investment and pro-business initiatives to increase foreign investments in the country.

Singapore’s domestic rates are stable in the face of FX adjustment, reflecting easier liquidity for the banking sector. Meanwhile, Thailand’s combination of rising farm incomes, regional manufacturing, and supplementary budget adds to steady tourism inflows and fiscal stimulus. Indonesia’s growth is expected to be supported by infrastructure, and similarly, Malaysia’s public infrastructure spending is supported by an improvement in external demand. While each country has respective challenges, they are all stable for the most part.

ASEAN integration

Mr. Panlilio moved on to discuss the ASEAN integration, with key objectives consisting of 1.) designing and implementing an integrated financial system linking the 10 ASEAN member countries, 2.) achieving inclusive growth by creating a “level playing field” for burgeoning businesses and economies within the region, and 3.) by helping reduce barriers to entry, the ASEAN financial integration will be giving its participants a bigger marketplace, where assets can be sourced from various players. This being said, there are economies that are more ready to take on the integration than others.

Mr. Panlilio went on to give an overview of the design plan of the ASEAN integration, which includes financial service liberalization, capital account liberalization, financial infrastructure building, and capital market development.

National growth indicators

Mr. Cezar Consing was the next speaker and he presented BPI’s official economic projections for the Philippines, including national growth indicators, credit ratings and trade goods deficit.

While the Philippines continues to face various economic and financial challenges, Filipinos remain optimistic about the economy. And all things taken, the country’s GDP growth will still be high and the Philippines will continue to stand out as one of Asia’s strongest performers.

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About the author:

Marge Friginal-Sanchez is an editor and writer for John Clements Consultants, Inc. She was previously connected with Goodyear Philippines and the American Chamber of Commerce. Marge studied creative writing at Gotham Writers’ Workshop, New York, and is a Business Management graduate of Assumption College.