The Philippine economy is poised to weather regional challenges, including inflation, geopolitical tensions, and debt concerns, the ASEAN+3 Macroeconomic Research Office (AMRO) said.
“[The] Philippines [has] a very different economy from the other ASEAN in a sense that is a very service-driven economy, but it has been very resilient in the last few years, after the big shock in 2020,” AMRO Chief Economist Hoe Ee Khor said.
This followed a question about the Philippines' vulnerability to global shocks from advanced economies and ways to maintain resilience.
In a briefing, AMRO said that ASEAN+3 (Southeast Asian countries plus China, Japan, and South Korea) is facing risks like an inflation comeback, heightened geopolitical tensions, and rising debt.
Khor, however, is optimistic about the Philippine economy, noting that it is “continuing to grow very strongly, and it's attracting a lot of investment more recently, including in the electronic sector.”
For Khor, the country’s economy shows promise with growth in renewable energy like solar panels and wind power, strong performance in the BPO sector, and untapped tourism potential which needs infrastructure development.
“Infrastructure is one of the weaknesses in the economy. The policymakers are aware of that, and they have a very ambitious infrastructure plan,” the chief economist commented.
Once infrastructure programs are implemented, “I think the Philippine economy will grow quite rapidly.”
AMRO's latest statement on ASEAN+3 stressed the evolving financial risks in the region, with decreasing inflation but increasing geopolitical tensions, posing various challenges to financial stability.
According to AMRO, these factors plus the uncertainties about U.S. growth increased market volatility in the third quarter of 2024 despite the U.S. Federal Reserve's monetary easing efforts,
The region's dependence on the US dollar for cross-border finance poses risks of funding shortages and increased vulnerability to global shocks during monetary tightening or geopolitical tensions, AMRO stated.
To lessen the impact of external shocks, AMRO advises ASEAN+3 economies to remain vigilant against the risks, enhance regional cooperation and surveillance, stabilize the property sector, and strengthen financial institutions.
It also said to reduce reliance on the US dollar by promoting local currencies and cross-currency payment systems to strengthen resilience against shocks. (Derco Rosal)