The Philippines is looking less vulnerable now than it used to be to the impact of low global commodity prices and China’s economic slowdown, banking giant HSBC said.
In its latest research note, HSBC said the global price decline in most commodities and the easing of China’s economic growth had given rise to new concerns, prompting it to consider a broad range of indicators to look for warning signs in 40 developed and emerging markets (EM).
The report stressed that the Philippines is one of the few emerging market economies relatively unexposed to a slowdown in the world’s second largest economy.
“We are less concerned about the Philippines than we were, given the relative immunity from a slowdown in China,” it said in the research note.
Trade in goods, especially commodities, plays a small part in total exports and so the same risks to growth do not exist, it explained.
HSBC’s view is in line with the government’s assessment that the country’s strong services exports offset weakness in the trading of goods.
The latest national accounts data from the Philippine Statistics Authority showed that exports of services in the first half grew 25.3 percent year-on-year to $848.26 million, while exports of goods contracted by 8.4 percent to $1.024 billion.
“This has been reflected in the relative outperformance of the Philippine peso” as the country has avoided much of the fallout from the financial markets turmoil, HSBC concluded.
As of end-September, the exchange rate between the Philippine peso and the US dollar averaged P46.92 to $1.