PH among Nomura’s “troubled 10” list
The Philippines was included on Japan-based financial services firm Nomura’s “troubled 10” list of emerging markets (EM) that are at risk to imminent monetary policy changes in the United States and slowing growth in China.
Nomura chief economist Rob Subbaraman stated that the 10 economies have three vulnerabilities in common — debt problems, capital flight, and large fiscal and current account deficits.
Subbaraman warned that “the prospect of the Fed normalizing monetary policy amid China’s slowing economy is a dreadful combination for EM, only to be made worse by the three EM vulnerabilities that we have found lurking in the shadows.”
Meanwhile, Bangko Sentral ng Pilipinas (BSP) governor Benjamin Diokno is in opposition with this assessment and said that the country has a different appreciation of economic and political affairs and the current management of the COVID-19 pandemic.
Diokno added that “It’s fallacious to treat EMs as one homogeneous group” as he explained the different characteristics of each market.
The BSP has kept key interest rates at record lows this year and disclosed that it would keep its current monetary policy settings as long as inflation allows to support the economic recovery from the pandemic.
