Philippine consumer spending primed for growth

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Phil shopping Philippine households have among the lowest debt in Asia, solidifying a “long runway” for continued economic growth in the outperforming ASEAN nation, a study by UK-based bank Standard Chartered shows.

As per figures collected in September 2012, the Philippines has among the most room for more leverage in Asian economies at a debt/GDP ratio of 81 per cent, just behind best-ranked Indonesia at 58 per cent, according to the study.

“The Philippines has plenty of room to expand its private-sector leverage to boost domestic consumption and sustain growth. There is also ample scope for the private sector to partner with the government in financing ambitious infrastructure projects,” the Standard Chartered report said.

While the Philippines has only registered tepid credit demand as of recent, there are signs of a sturdy growth trend that indicates higher demand in the rising middle class, a product of the country’ vivacious BPO industry.

An increase in household leverage would also sustain domestic demand, the top contributor to the Philippine growth machine, accounting for 70 per cent of GDP in 2012.

The country’s public-private partnership (PPP) programme seems much more sanguine in light of the positive leeway the government can tap for financing.

“The low level of leverage in the economy means there is room to finance the government’s PPP infrastructure investment plans,” the report noted.

A major thorn in the side, the Philippines must continue to battle high government debt, which after decades of neglectful bookkeeping places the ASEAN nation amid the other top two debtor governments in Asia, Japan and South Korea.

However, the get-out-of-debt card looks to be in play.

“The Philippines public debt burden is likely to decline over time given the large gap (the largest in Asia) between its present 10-year yield and its average coupon payment,” says Standard Chartered.

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Reading Time: 2 minutes

Philippine households have among the lowest debt in Asia, solidifying a “long runway” for continued economic growth in the outperforming ASEAN nation, a study by UK-based bank Standard Chartered shows.

Reading Time: 2 minutes

Phil shopping Philippine households have among the lowest debt in Asia, solidifying a “long runway” for continued economic growth in the outperforming ASEAN nation, a study by UK-based bank Standard Chartered shows.

As per figures collected in September 2012, the Philippines has among the most room for more leverage in Asian economies at a debt/GDP ratio of 81 per cent, just behind best-ranked Indonesia at 58 per cent, according to the study.

“The Philippines has plenty of room to expand its private-sector leverage to boost domestic consumption and sustain growth. There is also ample scope for the private sector to partner with the government in financing ambitious infrastructure projects,” the Standard Chartered report said.

While the Philippines has only registered tepid credit demand as of recent, there are signs of a sturdy growth trend that indicates higher demand in the rising middle class, a product of the country’ vivacious BPO industry.

An increase in household leverage would also sustain domestic demand, the top contributor to the Philippine growth machine, accounting for 70 per cent of GDP in 2012.

The country’s public-private partnership (PPP) programme seems much more sanguine in light of the positive leeway the government can tap for financing.

“The low level of leverage in the economy means there is room to finance the government’s PPP infrastructure investment plans,” the report noted.

A major thorn in the side, the Philippines must continue to battle high government debt, which after decades of neglectful bookkeeping places the ASEAN nation amid the other top two debtor governments in Asia, Japan and South Korea.

However, the get-out-of-debt card looks to be in play.

“The Philippines public debt burden is likely to decline over time given the large gap (the largest in Asia) between its present 10-year yield and its average coupon payment,” says Standard Chartered.

StanChart

 

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