In light of the United Kingdom voting to leave the European Union, the world has entered uncharted waters. Its immediate repercussions will roil the global financial markets and affect all countries, without exception but with varying degrees. The improvement in the fundamentals of the Philippine economy will put us in good stead but should not lull us into overconfidence. The Philippines is taking a cautiously vigilant stance on the Brexit’s effects on our shores–gradual and minimal at this stage. We are cognizant that there will be immediate sentiment-driven herd reactions in the near-term in response to the heightened volatility and risk in the global markets, but are confident the country’s fundamentals remain a strong anchor as we navigate a sustainable path across today’s turbulent waters.
The Philippine economy has a robust domestic consumption core, insulating it from the bulk of Brexit’s effects. About 200,000 Filipinos work in the UK, sending around $1.4 billion in 2015, about 5.6% of the total remittances sent back home. Their welfare is one of the government’s topmost priorities as we watch the resulting developments unfold. The Brexit has no direct effect to our debt structure, as national government debt is denominated mainly in local currency (PHP – 67%) with the rest made up of the US dollar at 26%, Japan Yen at 5%, and the Euro at a small 1%.
We likewise note that our diplomatic and economic relationship with the UK is not contingent on its membership in the EU. As such, our ties will continue to strengthen and deliver tangible benefits for both our peoples for the long-term. We are heavily invested in our productive economic partnership with the UK and will remain so regardless of the Brexit vote.
While it remains true that we are less vulnerable than others, we are reminded that we are never immune. Thus, we need to continue to build on the gains of the past 6 years–strengthen the macroeconomic fundamentals and boost the confidence of the markets. Staying the course in the path President Aquino has started is best way to keep the luster on Asia’s bright spot in these challenging times.