Philippines’ bank governor optimistic for 2009

The closing weeks of 2008 brought encouraging signs that this Asian crisis might not be as bad as the last one. Lawrence White speaks to Amando M Tetangco Jr, governor of the central bank of the Philippines, about the challenges facing the banking sector, forecasts for growth and inflation, and lessons learnt from the 1997 crisis.

The lessons learnt from the crisis of 1997 and the reforms that followed it mean that the outlook for 2009 is not nearly as gloomy as might be expected. Economic outlook for 2009   On overseas remittances Dollar outflows Primary bank secor concerns Philippine treasury holdings Current NPL ratios  Inflation Coordinating a response to the crisis It’s been a tough year by any measure, so let’s look forward. What’s your outlook for 2009? The economy, while definitely affected by the challenges facing global markets, has proven to be quite resilient and has done better in relative terms than many other emerging markets. For example, we saw a respectable growth rate for the first three quarters of 2008 of 4.6%. The banking system has also been resilient, for a couple of reasons. First, over the last few years we’ve implemented economic, fiscal and financial reforms to strengthen the economy. We also have buffers in place to protect the economy in a downturn, such as strong domestic demand supported by overseas remittances. Secondly, local banks’ exposure to foreign financial institutions is fairly minimal, so going into 2009 we are in a better position despite the fact that there will clearly be challenges ahead.