Metro Manila (CNN Philippines) — Greece’s economy is awfully sick.
Last year, its gross domestic product (GDP) grew by just 0.8 percent, according to World Bank figures. That’s barely a rebound from a six year-long recession that saw the GDP contract annually by as much as 8.9 percent (2011).
Eurostat figures reveal that the country’s debt-to-GDP ratio has not dropped below 156.9% since 2011. The ratio stood at 177.1 percent last year — that’s the largest in the EU.
Greece’s default on a $1.7 billion International Monetary Fund (IMF) loan earlier this week could subsequently expose emerging markets, such as the Philippines, to a myriad of economic risks. Investors could flee developing countries for safe havens, and foreign exchange rates may get more volatile.
Hence the problem: Will the Philippine economy catch a cold?
The Department of Finance (DoF) has assured that the Philippines is not as as vulnerable to the Greek crisis as one would think. “The Philippines stands as a pillar of stability in the region with a sound fiscal position decoupled from any spillover effects,” it said in a statement.
“The Philippines has continued to strengthen its macroeconomic fundamentals, with the widening of fiscal space, tamed inflation, robust reserves, and the strong performance of a well-capitalized banking sector, enabling the country to withstand external shocks and other challenges to price and financial stability.”
‘ ’13’:
Minimal trade relations
Statistics from the DoF show that the Philippines has minimal trade relations with Greece. Last year, Greece accounted for just 1.38 percent of remittances to the Philippines, 0.01 percent of Philippine exports, and 0.02 percent of Philippine imports.
The IMF predicts the Philippine GDP to grow by 6.7% this year and 6.3% in 2016. The World Bank, on the other hand, expects growth to sit at 6.5% this year and the next.
As of May, the Bangko Sentral ng Pilipinas’ (BSP’s) reserves stood at $80.4 billion, enough to cover about 10 to 11 months worth of imports. The funds are also equivalent to 4.5 times the country’s short term debts.
The country’s balance of payments (BOP), which comprises all transactions of its residents with the rest of the world, yielded a $3.3 billion surplus during the first three months of the year, equivalent to 4.8% of the first quarter’s GDP.
Although the country registered a full-year deficit of $2.9 billion in 2014, the BSP projects a BOP surplus of $2.0 billion by the end of this year.
“The overall decline of the debt burden, strong external position and banking system, stable inflation, well managed fiscal position, and participation in cooperative frameworks sustains market confidence in the country,” said Finance Secretary Cesar Purisima in a statement.
