The Philippines ranked as the most resilient among emerging market economies in 2014 indicating it has the strongest macroeconomic backing to withstand global financial pressures, according to a US think tank. The US-based non-profit research group, the Center for Global Development in an essay “Emerging Market Macroeconomic Resilience To External Shocks” (February, 2015) said from 2007 or the pre-global crisis to 2014, the Philippines’ rating in the resilience indicator jumped from seventh place of a list of 21 EMEs to No. 1.
According to the author, Liliana Rojas-Suarez, the indicator shows a country’s macroeconomic resilience and its capacity to withstand tougher external shocks, and the higher the value indicator, the stronger it will be against global pressures. In the study, Rojas-Suarez attributed the Philippines’ resilience to the pre-crisis period measures implemented by the government to ensure that domestic fundamentals are solid enough to buck another global financial crisis. Based on the resilience indicator, the Philippines is first-ranked with a value indicator of 0.74 followed closely by South Korea with 0.71. In third place is China with 0.58, followed by Chile and Thailand with 0.53 and 0.34 scores, respectively. The top three ranked countries are in Asia while the two countries with the lowest ranking is in Latin America -- Argentina with -2.08 and Brazil with -0.35, in the 21st and 15th place in the 21-EMEs list. “Most of the highest rankings were concentrated in Emerging Asia (with) the Philippines and Korea (as) the strongest countries,” noted Rojas-Suarez. A resilient EME is a macroeconomy that is “highly resilient to adverse external shocks if the event does not result in a sharp contraction of economic growth, a severe decline in the rate of growth of real credit and/or the emergence of deep instabilities in the financial sector,” said Rojas-Suarez. In the case of the Philippines, a notable factor for its positive resilience indicator is the country’s debt management as evidenced by a decreasing external debt-to-GDP ratio amid the years following the 2008 global financial crisis. Based on Bangko Sentral ng Pilipinas data, external debt-to-GDP has declined from 44.5 percent in 2007 to 27.3 percent by end-2014.