Global Headwinds Peril RP Economy

Article excerpt

The Philippine economy remains in a "sweet spot," Swiss-owned UBS said in a report, but also revealed that the country is not immune to global headwinds.

In its latest Southeast Asian Focus titled "Philippines: Still in a sweet spot," Edward Teather, UBS economist said that the country's external income remains weak as investment has not been excessive and the current account, alongside flow of funds, is neither swiftly deteriorating nor extreme.

"Although domestic credit growth remains buoyant, it is slowing. Debt ratios and other monetary indicators are moderate or moderating. Unfortunately for investors, the greatest source of concern probably lies with asset market valuations," Teather said.

"Equity valuations look rich, but property market indicators are far from stretched in a regional context," he added.

The UBS official noted that investment in the Philippines has yet to rise significantly relative to the country's gross domestic product (GDP), limiting the risk of over investment. Savings - income available to fund investment - have been more volatile and now appear to be falling relative to the economy. …