Sound economic fundamentals to cushion PHL from negative effects of US recovery

Sound economic fundamentals will spare the Philippines from the negative ripples of a looming US recovery that may prompt the Federal Reserve to scale back its bond buying program which unleashed further money flows into emerging markets, the central bank chief said Friday.

 

“We are monitoring that because at some point, the advanced economies will adopt exit strategies from their expansionary policies…” Governor Amando Tetangco Jr. told reporters at the sidelines of a BSP event on Friday. 

 

“But we have the tools to respond to that,” he added. 

 

“While there may be possible effects of an exit strategy, I think investors will still look at the fundamentals, the prospects of individual countries, Tetangco noted. 

 

So it does not mean that suddenly they will just exit… They have to assess,” he said.

 

“Maybe there will be some outflow [of funds], [but] I don’t think it will be massive because the fundamentals of the country continue to be sound and prospects continue to be favorable,” he said.

 

Philippines will continue to attract more foreign investments, particularly sectors that do not need intensive capital but generate more jobs, the central bank chief noted. “An example of this is the business process outsourcing, which currently employs over 600,000 workers,” he said.

 

According to a central bank report last month, BPO receipts helped allowed the the Philippines to accumulate a $274-million balance of payments surplus— a reversal of the $79 million deficit a year earlier. — VS, GMA News