Structural imbalances intensifying in Philippines’ economy: ANZ

MANILA - The Philippine economy has undergone structural improvement in the last decade, with potential growth currently around 6½%, more than double what it was during the 1990s, but the recent period of strong growth has resulted in a build-up of imbalances in the economy, which intensifying, according to a new report by ANZ Bank.

“Our contention is based on the performance of three inter-related indicators: 1) rising credit intensity; 2) persistently high exposure to the real estate sector alongside rising property prices; and 3) deterioration in the external position,” ANZ says.

“Monetary policy remains focussed on pushing ahead with growth rather than curbing these imbalances. Although macro-prudential standards have periodically been tightened, the central bank has resisted hiking rates.

“Against this backdrop, the Philippine peso would need to bear the burden of adjustment. The PHP has been the region’s worst-performing currency year-to-date and is likely to remain so in the remainder of the year.” www.live.anz.com (ATI).