Philippine growth is sustainable – AIA

AIA Group, the largest independent publicly-listed pan Asian life insurance group and parent company of the Philippines' leading premier life insurance company Philam Life, said the country's strong economic growth is sustainable because it remained under leverage enabling the economy to absorb more capacity for further growth.

John Chu, AIA Group Chief Investment Officer, said at a media roundtable for the AIA Group Investment Conference in Manila that based on its assessment the growth in the Philippines is sustainable in the long term.

"This tells about the leadership of this country. More importantly, the Philippines is now on a very positive investment cycle and growth will be sustained in our assessment. Everything seen and read is going to be sustained for the long period of time," he added.

According to Chu, there are several factors working in favor of the Philippines. For one, he said, the Philippines has remained "undergear" or negative output gap enabling it to leverage more so it can take more growth. This is evident, he said, in low household complemented by a high liquidity system as show by the $50 billion in special deposit accounts.

"Even if you release 50 percent of it or $25 billion to the system that is still very liquid so this is going to help the equity market," he said.

The strong liquidity in the local economy has fueled the country's Philippine stock market to become the number one performer in Asia in 2012 and still holding on to that reputation year to date by outperforming the rest in the region.

In addition, the recent credit upgrade to investment status would entice more capital inflow.

Already AIA has placed the Philippines among its top overweights for investment destination in the 17 countries in the Asia Pacific region where it has presence. AIA has been very constructive in looking at the Philippines particularly on the investments side.

"Everything looks very positive. We are here to see what we have been told and read, " Chu said noting the strengths of the domestic economy as he cited the international reserves of $100 billion against the $64 billion total foreign debt making the domestic economy is a very strong position.

Chu also said the strong confidence from all fronts - politics, business and consumers stressing "every area is on a rising trend" which he attributed to the respect that this government has earned from the people. In terms of regional allocation, Chu said, the Philippines holds an important position in the AIA Group's investment portfolio in the past two years placing it among the overweights.

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