In its April-July 2013 issue of This Quarter in Asia, the OECD Development Centre cited Asian Business Cycle Indicators (ABCIs) as showing that growth in five members of the Association of Southeast Asian Nations (ASEAN) — Indonesia, Malaysia, the Philippines, Singapore and Thailand — “continues to be resilient, compared to the two large economies (China and India) in the region.”
The report specifically noted that “growth in the Philippines has been strong, thanks to upbeat business and consumer sentiment, sustained by robust remittances.”
The first-quarter issue had similarly cited the country’s strength.
“The Philippines, where optimism has been soaring, is growing at an enviable pace supported by public infrastructure spending and election spending,” that earlier report noted, referring to expenditures linked to the May 13 midterm polls.
A map of East and South Asia in the latest issue that sought to portray general “momentum” of “business cycle” showed the Philippines as the only economy that had “strong” momentum, compared to a “stay the same” description for Indonesia, Malaysia, Singapore and Thailand, and “relatively weak” for China and India.
The same report noted further that:
• Indonesia’s economic growth “continues to be stable”, though “measures related to a reduction of energy subsidy need to be carefully managed”;
• growth in Malaysia remains resilient, backed by “still-strong consumption and investment growth”;
• Singapore’s economy “remains relatively weak” as manufacturing struggles in the face of weak exports; and
• Thailand’s economy “shows resilience, though some signs of weakness in exports and private consumption are surfacing.”
The OECD Web site described ABCIs as “a tool to provide comparable information on the very short-term (the following quarter) economic climate and potential macroeconomic risks of Asian economies, as close to real time as possible.”
The indicators are also designed to give “early warning of potential macroeconomic risks in Asia.”
ABCIs — which are unique to each country since components are chosen according to relevance to each one’s situation — track so-called “composite coincident” and “composite leading” indicators.
“Composite coincident indicators” for the Philippines consist of of gross value added for industry and services, average capacity utilization, exports and manufacturing sales.
“Composite leading indicators” are particularly designed to enable analysts to have a snapshot of specific economies five to six months in advance. For the Philippines, the list includes business volume index for the current quarter, credit access index for the current quarter, consumer price index, the Philippine Stock Exchange (PSE) composite index, the peso-dollar exchange rate, volume of production index of basic metals, and total volume of motor vehicles sold.
The Philippines’ composite coincident indicators firmed up to 102.4 points last quarter from 101.0 points the preceding three months, while its composite leading indicators edged up to 101.9 points from 101.6 points.
The report noted that Southeast Asian economies covered remained resilient despite risks.
“Coping with volatility of cross-boarder capital flows, related to global liquidity infusion, is becoming an important policy challenge in the region,” the report read.
“More recently, expectation of a gradual withdrawal of quantitative easing led to capital outflows from the ASEAN region and concomitant depreciation of ASEAN currencies — all happening at a relatively rapid pace.”
The PSE index (PSEi) had closed at 31 record highs since January — the last at 7,392.20 on May 15. But the main index has succumbed with many global markets to volatility stoked by uncertainty since US Federal Reserve officials first hinted late in May of winding down a $85-billion monthly bond-buying stimulus starting this year in the face of sustained economic recovery. Improved US prospects, in turn, have lured funds away from emerging markets.
PSEi closed at 6,327.02 yesterday, just 8.85% more than its 5,812.73 finish on Dec. 28 — the last trading day of 2012.
Similarly, the peso traded within the P40-P41 per dollar band earlier this year, but weakened to multi-month lows since the first Fed comment. June 24 saw the peso ending at P43.84 to the dollar, the local currency’s weakest level in 17 months.
The peso closed at P43.49 to the greenback yesterday, 5.94% weaker than its P41.05 finish on Dec. 28 last year.
OECD’s report added, however, that “[a]lthough there are some downside risks, ASEAN’s growth momentum remains robust overall in the coming few months.”
In comparison, growth momentum in China and India “is weaker than in ASEAN,” it noted.
“India’s growth is still not strong, though some positive signs are observed in accordance with a gradual reduction of inflationary pressure,” the report read.
“China also continues to struggle for momentum, partly due to still-weak performance of manufacturing.”
The report added that composite leading indicators (CLIs) “point to moderate improvements in growth in most major OECD economies,” while those for “large emerging economies…point towards stabilizing or slowing momentum.” CLIs for the United States and Japan “continue to point to economic growth firming”, while those for “the Euro area as a whole… continue to indicate a gain in growth momentum.”
"Strong" momentum noted
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