Foreign funds seeking safer havens in the wake of an anticipated interest-rate adjustment by the US Federal Reserve (the Fed) should not unduly affect emerging-market economies like the Philippines.
This was learned on Thursday from Columbia University Executive Director Arvid Lukauskas, who said emerging markets have developed a degree of resilience in the last few years since the so-called taper tantrum when, as consequence, countries like the Philippines started fortifying their economic foundations and as investors become even more discerning of the underlying fundamentals of certain economies no matter the global turbulence.
As a result, Lukauskas said an interest-rate hike by the US Fed will not likely derail emerging markets. Also, the expert said the US Fed will likely make an abrupt adjustment such that emerging markets should not be unduly affected.
He said the Philippines, in particular, is in a “good place” as the country’s image as an investment destination should benefit from the strong and sustained growth it has acquired over the years.
Markets across the globe also should not “overreact” with statements coming from US President-elect Donald J. Trump, dismissing such pronouncements outrageous policy proposals.
Latest data from the central bank showed sustained capital outflows since early November, when net outflows totaling $337 million was noted.
On local politics, Lukauskas said the series of unnerving comments President Duterte has hurled against the world’s largest economy could take its toll on US-Philippine relations at some point.
But he quickly added, however, that markets should not be overly worried as the long-standing relations between the US and the Philippines is “strong enough to weather those comments.”
In the highlights of the minutes of the BSP’s Monetary Board meeting released on Thursday, the central bank said the domestic market indicators mirror the investors’ risk-averse attitude as the likelihood of a US interest-rate hike heighten.