BSP sees robust growth for emerging economies

MANILA, Philippines - Investors should rethink pulling out funds from emerging markets as the Bangko Sentral ng Pilipinas (BSP) said growth in these economies continue to be “robust.”

“The pace of growth in emerging economies... remains robust,” the BSP’s Monetary Board noted in its meeting last July 25.

“Although recent indicators suggesting weaker domestic demand in major emerging economies somewhat dampen the global growth outlook,”it added.

Emerging markets, which became safe havens for investors amid a downturn in developed economies, are now experiencing capital flight because of the US Federal Reserve’s impending easing of its bond-buying program due to continued progress in the world’s largest economy.

Looking at Asia, regional trends such as Indonesia’s worsening current account deficit and the contraction of Thailand’s economy have also affected other emerging market neighbors.

The continued robust growth in emerging economies is amid a backdrop of a “modest” global economic growth as the US recovers, although problems in the euro zone linger.

“The recovery in the US has continued on improved business and consumer sentiment, while economic activity in Japan  gains further traction,” the report read.

“Meanwhile, the downturn in the euro area continues.”

The Monetary Board expects the Philippine economy to continue its growth in the second quarter, following the stronger-than-expected 7.8 percent expansion in the first three months of the year.

“The monthly survey of purchasing managers by the Philippine Institute for Supply Management suggests that the Philippine economy was still in expansion phase in the second quarter, supporting the results of the latest business cycle analysis of the BSP and various leading economic indicators monitored by the BSP and National Statistical Coordination Board which all point to a continued economic upturn,” according to the report.

At the same time, the central bank noted that results from its consumer and business expectations surveys suggest optimism in the second quarter.

“Survey results suggest bullish consumer and business sentiments for Q2 (second quarter) 2013 and continued optimism for the succeeding quarters,” the report read.