It’s more what the Philippines doesn’t have than what it does have that’s making the country Southeast Asia’s safe haven amid an emerging-market rout.
Relatively low levels of foreign investment in its bonds and stocks are shielding the Philippines from an intensifying selloff, while a comparative lack of raw materials means it’s less vulnerable than Indonesia or Malaysia to sliding commodities prices.
Stability under President Benigno Aquino stands in contrast to Thailand, ruled by the military since May 2014, and Malaysia, where the prime minister is facing calls to resign amid a political scandal.
Philippine local-currency sovereign bonds returned 2.9 per cent over the last three months, the most in Southeast Asia. The peso has held up better than its peers, losing 4.5 per cent, compared with drops of 8 per cent in Thailand’s baht, 12 per cent in Indonesia’s rupiah and 18 percent in Malaysia’s ringgit. The benchmark Manila stocks index has also declined the least in the region over the period.
“It’s definitely the regional star,” said Edwin Gutierrez, who helps oversee $13 billion as the head of emerging market sovereign debt at Aberdeen Asset Management in London. “In a world starved of growth, Philippine growth — albeit slowing — is holding up relatively well,” he said, adding that a relative lack of foreign participation had protected the country from capital flight.
The economy expanded 5.7 per cent last quarter from a year earlier, according to a Bloomberg survey before data due August 27. That would be an improvement from 5.2 per cent expansion in the first three months, although slower than 6.1 per cent in 2014. Indonesian and Malaysian growth slowed to 4.67 per cent and 4.9 per cent, respectively, last quarter, while Thai gross domestic product increased 2.8 per cent.
A burgeoning business-process outsourcing industry is aiding the Philippine economy. Revenue from BPO, which includes customer call centres as well as the farming out of accounting tasks, will rise to $21.2 billion (Dh77.8 billion) this year and $25 billion in 2016 from $18 billion in 2014, according to the IT and Business Process Association of the Philippines… see more