Euro debt crisis to have minimal impact on RP, says Tetangco

MANILA, Philippines - Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said yesterday the impact of the European debt crisis on the Philippines would be nil to minimal if the troubles are confined to Greece and do not spread to other parts of Europe and the world.

“If the troubles are confined to Greece and there is no contagion to the other countries in Europe then the potential impact on us is going to be minimal, in fact nil,” Tetangco told reporters on the sidelines of the launch of the 2010 Citi Microentrepreneur of the Year Awards yesterday.

He pointed out that the entire European community and the International Monetary Fund (IMF) already made a commitment to address the debt crisis.

“All of the European governments are trying to come up with reforms to address the spread of the problem. If they are successful in doing that then the impact on the other countries, including Asian countries would be much less,” the BSP chief stressed. 

According to him, Socioeconomic Planning Secretary Augusto Santos already said the country’s domestic output as measured by the gross domestic product (GDP) likely expanded between 2.9 percent and 3.95 percent in the first quarter of the year on the back of the recovery of the manufacturing sector as well as the strength of the services sector.

The growth in the first quarter was within and even stronger than the target of 2.6 percent to 3.6 percent set by the Cabinet-level Development Budget Coordination Committee (DBCC) for 2010 from 0.9 percent last year.

However, Tetangco said the impact of the debt crisis would be different if it affects different parts of Europe which is a major market of the country’s leading trading partners, including the United States and China.

“If it is going to affect Europe as a whole then it will be different. Europe is an important market not only for the US but also for countries in Asia like China. We are exporting components to China which then process this and put this together and reexport to other markets such as US as well as Europe,” he explained.

The BSP chief said he is confident that the Philippines will be able to survive the crisis as it has already diversified its export markets in order to minimize the impact of major external developments. 

“With the diversification, the extent of negative development in one market is now less compared to when we have not yet diversified much. We will have to see, as I said the European governments are trying to come up with a solution to this. They have taken important steps towards that, hopefully they are able to resolve and come up with a concrete and tangible plans,” he said.

Latest data from the National Statistics Office (NSO) showed that merchandise exports surged by 42.9 percent to $11.326 billion in the first quarter of the year from $7.926 billion in the same quarter last year. 

The European Union together with the IMF have committed to put up a 110-billion euro package to bail out Greece from its debt debacle.

However, critics have questioned the viability of the bailout plan for Greece wherein the IMF offered 30 billion euros while the rest of the European countries vowed to contribute 80 billion euros over three years.