Is the Philippine economy on the mend? Yes, says president Gloria Macapagal-Arroyo, who carried the fresh news of the fastest rate of growth for the Philippine economy in two decades to the Sydney meeting of Asia-Pacific leaders earlier this month.
Maybe, say economists and market analysts, who this month revised economic growth forecasts upwards and put Philippine equities on an oversold watch list. They advise that, along with Malaysia, it was one of only two markets in Asia ex-Japan that were sold down in the wake of the US subprime credit crisis to within 5 per cent of previous troughs seen in the past three years.
Too early to tell, say bond investors, who remain cautious about the latest health checks on a country that has yet to entirely shake off the tag of the 'sick man of Asia', and who proceeded to attach a high-risk premium to the 20-year bond issue by the Philippine government in September - its first such long-dated issue since December 2006.
On the economic front, however, official data released on August 30 was unambiguously positive. GDP expanded by 7.5 per cent year-on-year in the second quarter, the government said, and this was the fastest rate of growth in two decades and well ahead of the best forecasts by Philippine economy watchers.
In its Asian Development Outlook for 2007, the Asian Development Bank had predicted the Philippines was likely to maintain 'modest economic growth', with GDP rising 5.4 per cent this year, and 5.7 per cent in 2008.
'Growth momentum has accelerated in the last three quarters, however, raising the possibility that Philippines growth has shifted up a gear,' says UBS economist Edward Teather.
