THE Philippine economy should remain resilient despite current volatilities bogging down global markets, although experts noted that a faster infrastructure rollout plus a kinder regime for foreign investments would add to the country’s luster.
Budget Secretary Benjamin E. Diokno said the Philippines is one of the “least vulnerable” economies to a weak external front, which has been reeling from a trade war between the United States and China, increasing protectionism, higher world oil prices, and monetary tightening in advanced economies. Higher domestic inflation is also a key concern.
“Amidst external developments like the strong dollar and higher oil prices, it’s important to note that the Philippines has the tools to combat such volatilities,” Mr. Diokno said during Euromoney Philippines Investment Forum held Friday at the Fairmont Makati.
The Budget chief cited structural dollar inflows from remittances, business process outsourcing revenues and tourism, coupled with hefty dollar reserves to cushion against external shocks.
Industry executives echoed Mr. Diokno’s view, but noted the need for major reforms in order to keep investments coming.
Jose Emmanuel U. Hilado, chief financial officer and treasurer of the Union Bank of the Philippines, said that the country remains attractive for long-term investors as they know how to look beyond noise and appreciate good fundamentals and a young and skilled population, but not so for those looking for short-term gains.
Mr. Hilado cited the need to relax existing limits on foreign ownership in order to attract more global firms to the Philippines, as current restrictions dampen the country’s attractiveness as an investment destination.
For Nattika Kanpawong, vice president and branch manager for Bangkok Bank in Manila, added that improved ease of doing business will particularly boost confidence towards the country.
“[B]ecause of connectivity and infrastructure (concerns), the Philippines is day by day losing its competitiveness,” Ms. Kanpawong said, adding that continued investments on these fronts will put the country “back into the right track.”
“Amid these economic headwinds, on the overall, we are still optimistic that the Philippine economy is poised to sustain its growth momentum,” Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier also said during her keynote address.
Ms. Fonacier also noted that the central bank is “doing all it can to bring inflation back to within target at the soonest time possible” as inflation has averaged five percent as of end-September, well above the 2-4% target for the entire year.
Emilio S. Neri, Jr., lead economist at the Bank of the Philippine Islands, said prospects could be brighter next year as big-ticket infrastructure projects under the government’s “Build, Build, Build” initiative are expected to break ground and world crude prices relent from current four-year highs.
The Executive branch should also look to speed up the rollout of projects “a little more” — with particular focus on the regions — to unlock faster expansion, said Donna Gonzales, senior investment officer at the International Finance Corp.
The Duterte administration projects that the Philippine economy will expand between 6.5-6.9% this year, with bets that growth will pick up this semester following a 6.3% pace recorded during the first six months of 2018. — Melissa Luz T. Lopez