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December 30, 2008

Philippine economy will have limited impact from global crunch
The Philippine economy will weather the expected risks from the global financial crisis, the Manila Times quoted central bank (Bang¬ko Sentral) Governor Aman¬do Tetangco Jr as saying.

Tetangco expressed confidence that the risks in the global economy would have limited impact on the Philippines, citing the country’s current policy framework and fundamentals.

The governor outlined in a Global Source report the three risks posed by the continuing financial mess worldwide.

These include longer-term interest rates in the US which would be driven higher by wider budget deficits to pay for the fiscal stimulus packages, which would cause a fall in bond prices that, in turn, could lead to a fall in the US dollar and stock values.

The other risks are the credit crunch that could intensify in the event the proposed bail-out packages and reduction in non-performing assets do not proceed smoothly, and the possibility that consumption would be further undermined if the bailout packages for the US housing sector don’t arrest deteriorating confidence.

Tetangco said the Philippines faces the same risks, although on a limited scale. “I am convinced… given our current policy framework and macro fundamentals, the impact of these risks will likely be limited,” he said.

He said the national government has demonstrated discipline in managing its deficit and borrowing program as “the stimulus package being considered is targeted and is not expected to blow the deficit picture out.”

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