The Asian Development Bank noticed the surprising economic performance of the Philippines and four of its neighbors, clarifying the unique and critical role the “ASEAN 5” will need to play as global growth drivers amid recessions in the rest of the world.
In an official report released in July, the development bank cut its growth forecasts for other countries in the region but affirmed its positive outlook for the Philippines, Indonesia, Thailand, Malaysia and Vietnam. According to the report, an average growth of 5.6% among the five resilient economies is realizable even amid the crippling debt crisis in Europe and the struggling US economy across the Atlantic. The impact of this dual downturns have reached the BRIC markets, even China, which has just recently reported that its economy has lost momentum, with its much lauded growth rate unexpectedly contracting to 7.6% in the second quarter.
That said, where can the world turn to now that economic superpowers in the euro zone, the US, and China appear to have their hands full fixing domestic woes? The unlikely answer is a region in Southeast Asia where emerging markets are heroically warding off the effects of the global downturn. According to the ADB, “growth in Southeast Asia is expected to remain robust [despite the weaker external environment].” The development bank further explained that the strong domestic demand in these economies offset the negative impact of the recession that will take trillions of dollars to turn around.
Explaining how the Philippine economy specifically managed to stay afloat, a CNN article noted the rebound in electronic exports, strong remittances from workers abroad, superb performance of business outsourcing organizations, and domestic consumption. The Philippines exceeded its own and that of the IMF’s growth forecasts, managing to propel the economy by 6.4% during the first quarter. According to a Singapore- based analyst, the country generated more investments, curbed inflation, and managed to have its currency going up while interest rates tend to drop. All in all, the UBS analyst concluded, these factors create “a virtuous circle of improved stability.” Lending credence to that assessment are the facts that the Philippine Stock Exchange hit an all-time high in July and the peso performed better than any of the 11 major Asian currencies according to Bloomberg. Rating agencies have also unanimously upgraded the country’s credit position.
Perhaps it’s about time to give the Pacific archipelago another look. Maybe it’s really fun in the Philippines after all.
