THE ONGOING euro zone crisis is not likely to affect the Philippines substantially given the country’s robust remittances and foreign exchange reserves, global credit watchdog Standard & Poor’s said.
Elena Okorotchenko, Standard & Poor’s managing director and analytical manager of Asia’s sovereign and public finance ratings, said in a May 28 commentary that the country’s external liquidity, supported by $15 billion in annual remittance inflows and foreign exchange reserves of about $46 billion, would serve as buffers to renewed global turbulence.
“This makes the Philippines somewhat less vulnerable to shifts in external sentiment,” the S&P report states.
Data from the Bangko Sentral ng Pilipinas show that remittances from Europe amounted to $777 million in the first quarter, about 18% of the $4.3-billion total.
Monetary authorities expect the amount of money sent home by migrant workers to grow by 8% this year from 2009’s $17.348 billion.
The debt watcher also noted that domestic investors hold a large share of foreign currency-denominated government bonds, adding a further cushion to external shocks.
“Moreover, many investors view emerging Asia (including Indonesia and the Philippines) as attractive investment destinations relative to many developed markets,” it said.
“This is due to their stronger growth prospects, better demo-graphics, lower government debt burdens, and adequate external liquidity.
“We believe the combination of these factors is likely to maintain capital inflows into Asia,” S&P said. — J. B. F. Santos