by: Sarah Joson
Tuesday, April 14, 2015 |
A research report called “Emerging Market Macroeconomic Resilience to External Shocks: Today versus Pre-Global Crisis” was released by Investor Relations Office Economist Liliana Rojas-Suarez last April 2, and results show that the Philippines is found to be the most resilient emerging market.
The study ranked 21 countries based on the ability to withstand external shocks such as recession that would likely be caused by prolonged low inflation environment in Europe, and pending monetary policy normalization in the US. She said the environment of an emerging market before an adverse external shock hits is crucial in defining its resilience. The data she gathered from the study were compared to the figures and indicators in 2007 - the period before the global economic meltdown. The former data measured against the metrics indicated in the paper revealed that the Philippines is the leader in the ranking.
Rojas-Suarez designed seven “resilience indicators” for assessing the countries. These are current account balance as a ratio of gross domestic product (GDP), percentage of external debt to GDP, percentage of short-term external debt to gross international reserves, ratio of general government fiscal balance to GDP, ratio of government debt to GDP, inflation, and domestic liquidity.
Rojas-Suarez then pointed out that the country’s reduced external debt ratio fell to 20 percent last year, from nearly 40 percent in 2007. The country also did well in the reduced government debt-to-GDP ratio. The country likewise posted the remarkable figures for much-improved performance in inflation last year compared to 2007.
She said a country is considered highly resilient to adverse external shocks if its credit standing remains strong and growth doesn’t slow down amidst rising instabilities in the financial sector.