PH safe from impact of Greece crisis — BSP
The Bangko Sentral ng Pilipinas (BSP) is confident that the Philippines can absorb the negative effects of the Greek default due to the country’s strong economic fundamentals.
On the sidelines of a book launching last week, BSP Governor Amando M. Tetangco Jr. told reporters that the Philippine economy has sufficient buffers against external shocks.
“Volatility has also been observed but as you may have noticed in the foreign exchange market… there was an initial [peso] weakening but there was at the same time subsequent recovery,” Tetangco said.
“I think at the end of the day, investors will continue to look at the fundamentals of the economy in question and we believe that in our case the fundamentals continue to be sound and we remain buffered against external shocks,” he added.
Tetangco’s comment comes after the Department of Finance (DOF) said the Philippines can withstand any potential effects of the Greece debt crisis as the country’s exposure to the troubled nation is significantly low.
Finance Secretary Cesar V. Purisima said the local economy is prepared to navigate through challenges from uncertainties brought about by external risks and factors.
“We continue to develop measures fortifying the economic fundamentals we have built, as well as increasing competitiveness in the country, reaping brighter prospects for higher and more durable growth,” Purisima said.
According to the finance department, the country has no significant exposure to Greece having minimal trade with a mere 0.01 percent of total exports and only 0.02 percent of total imports last year.
Likewise, DOF said overseas Filipino remittances from Greece account for only 1.38 percent of the total.
With Greece missing its repayment to the International Monetary Fund (IMF) last month, emerging markets are expected to be at risk of capital flow reversal which can be prompted by either loss of investor confidence, asset price shifts, increase in borrowing costs, and foreign rate volatility.
According to the IMF, the Philippines’ fundamentals should provide for the necessary cushion to be able to manage the effects and respond adequately due to ample policy space.
Both the IMF and the World Bank forecast that for the next three years, growth will be above 6 percent, allowing financial and external developments to prevent any real economic decline.
“The overall decline of the debt burden, strong external position and banking system, stable inflation, well managed fiscal position, and participation in cooperative frameworks sustains market confidence in the country,” Purisima said.
“While the Philippines stands in good stead to navigate the challenges not only from Greece but emerging bouts of uncertainties, it is imperative to stay on the course of reform and maintain vigilance to put the country on path of sustained, higher and inclusive growth,” he added.