ADB poised to cut economic forecast for RP
CHERYL M. ARCIBAL, GMANews.TV
07/23/2009 | 10:11 PM
MANILA, Philippines - Manila-based lender Asian Development Bank (ADB) is poised to downgrade its economic forecast for the Philippines, citing external pressures faced by East Asia.
In its Asia Economic Monitor, ADB said the region will continue to be affected as the world’s industrialized countries – US, Japan, and the Eurozone – face their worst recession in recent years.
The ADB is set to release its update on the Asian Development Outlook next month.
Earlier, the ADB forecast a 2.5 percent growth for the Philippine economy. For its part, the country’s economic managers recently slashed growth projections to anywhere between 0.8 percent and 1.8 percent from the previous 3.1 percent to 4.1 percent.
“Before emerging East Asia can return to the levels of growth seen in recent years, industrialized economies must recover sufficiently to rekindle demand for the region's exports. The US, Japan, and Europe remain major markets for Asian exporters," the ADB said.
Although intra-regional trade has been improving, consumption of citizens in East Asia have yet to provide final demand for its own exports.
“As a result of only a modest recovery projected in 2010, the region's external demand will not pick up soon, and the region's export recovery will largely hinge on how quickly major industrial countries recover," the ADB added.
As for the Philippines, the ADB noted that it suffered the worst contraction in exports in the region, with the January to May period, registering a 35 percent decline.
However, what works well for the country is its reduced reliance on exports as an economic engine.
Contraction of exports of Philippine peers in the Southeast Asian region ranged between 25.3 percent and 32.9 percent.
However, the Philippines was only among three middle-income countries in Asia which registered growth in the first three months of the year at 0.4 percent. The other two countries were China and Indonesia.
This was indicated by the Philippine stock market, whose performance was considered as the fifth-best in the region with a 32-percent gain as of July 7, 2009.
Leading the pack were China, Indonesia, Taiwan and Vietnam, respectively.
However, the peso along with the Malaysian Ringgit were the weakest currencies in the region.
“BSP also took a gradual approach to cutting its policy rate, reducing it five times so far this year- from 5.5 to 4 percent," the study said.
In terms of fiscal deficit, the Philippines was among the most conservative, with a target of 3.2 percent.
The lowest fiscal deficit target in Asia was South Korea's 2.2 percent followed by Indonesia's 2.2 percent and China's three percent.
Philippine banks were also seen among the well-capitalized in Asia, with an average of capital adequacy rate of 15.7 percent, just lower than Indonesia's 16.8 percent.
Across the region, CAR (Capital Adequacy Ratio), or the ability to absorb losses, ranged between 8.2 percent and 14.7 percent.
But non-performing loans were one of the highest in region at 3.5 percent, after Thailand's 5.3 percent.
The study also said that Filipino banks were heavily invested in stocks and securities, with 25.6 percent of their portfolio mix parked at stock markets.
Others were ranging between 12.5 percent and 21.3 percent. - GMANews.TV
In its Asia Economic Monitor, ADB said the region will continue to be affected as the world’s industrialized countries – US, Japan, and the Eurozone – face their worst recession in recent years.
The ADB is set to release its update on the Asian Development Outlook next month.
Earlier, the ADB forecast a 2.5 percent growth for the Philippine economy. For its part, the country’s economic managers recently slashed growth projections to anywhere between 0.8 percent and 1.8 percent from the previous 3.1 percent to 4.1 percent.
“Before emerging East Asia can return to the levels of growth seen in recent years, industrialized economies must recover sufficiently to rekindle demand for the region's exports. The US, Japan, and Europe remain major markets for Asian exporters," the ADB said.
Although intra-regional trade has been improving, consumption of citizens in East Asia have yet to provide final demand for its own exports.
“As a result of only a modest recovery projected in 2010, the region's external demand will not pick up soon, and the region's export recovery will largely hinge on how quickly major industrial countries recover," the ADB added.
As for the Philippines, the ADB noted that it suffered the worst contraction in exports in the region, with the January to May period, registering a 35 percent decline.
However, what works well for the country is its reduced reliance on exports as an economic engine.
Contraction of exports of Philippine peers in the Southeast Asian region ranged between 25.3 percent and 32.9 percent.
However, the Philippines was only among three middle-income countries in Asia which registered growth in the first three months of the year at 0.4 percent. The other two countries were China and Indonesia.
This was indicated by the Philippine stock market, whose performance was considered as the fifth-best in the region with a 32-percent gain as of July 7, 2009.
Leading the pack were China, Indonesia, Taiwan and Vietnam, respectively.
However, the peso along with the Malaysian Ringgit were the weakest currencies in the region.
“BSP also took a gradual approach to cutting its policy rate, reducing it five times so far this year- from 5.5 to 4 percent," the study said.
In terms of fiscal deficit, the Philippines was among the most conservative, with a target of 3.2 percent.
The lowest fiscal deficit target in Asia was South Korea's 2.2 percent followed by Indonesia's 2.2 percent and China's three percent.
Philippine banks were also seen among the well-capitalized in Asia, with an average of capital adequacy rate of 15.7 percent, just lower than Indonesia's 16.8 percent.
Across the region, CAR (Capital Adequacy Ratio), or the ability to absorb losses, ranged between 8.2 percent and 14.7 percent.
But non-performing loans were one of the highest in region at 3.5 percent, after Thailand's 5.3 percent.
The study also said that Filipino banks were heavily invested in stocks and securities, with 25.6 percent of their portfolio mix parked at stock markets.
Others were ranging between 12.5 percent and 21.3 percent. - GMANews.TV
