Wednesday, November 28, 2012

Surprising 7.1% growth

PH economy best performer in Southeast Asia

The Philippine economy grew 7.1 percent in the third quarter year-on-year, exceeding expectations and making it the best performer in Southeast Asia.
The country’s economic growth was the strongest in Asia during the period after China’s.
“We are well on our way to surpassing our growth target of 5 to 6 percent this year,” Socioeconomic Planning Secretary
Arsenio Balisacan told reporters on Wednesday.
Balisacan said the high growth of the gross domestic product (GDP), the value of goods produced and services rendered in a given period, was expected to translate to more jobs and better incomes for Filipinos.
A jump in third-quarter farm output and a late rebound in exports also contributed to the economy’s 1.3-percent growth rate in the July-September quarter from April-June, which was three times as fast as economists had predicted.
Robust domestic consumption and higher government spending have helped cushion the economy from the worst of the global slowdown, while manageable inflation has allowed authorities to keep interest rates conducive to growth.
The country is the only economy in the world which the International Monetary Fund (IMF) believes will grow faster than earlier expected this year.
Earlier this month, the IMF raised its 2012 growth outlook for the Philippines to more than 5 percent from its October forecast of 4.8 percent, citing its sound fiscal and monetary policies.
‘Diamond’ of region
“The Philippines is the diamond of the region this year,” said Enrico Tanuwidjaja, economist for Southeast Asia at RBS in Singapore.
Indonesia was the second-best performer in Asean with 6.2 percent growth, followed by Malaysia (5.2 percent), Vietnam (4.7 percent), Thailand
(3 percent) and Singapore (0.3 percent). China posted a 7.7-percent GDP growth.
Balisacan said the third-quarter performance of the Philippine economy was way above the market’s media forecast of 5.4 percent.
The growth momentum is expected to continue next year as government works to ease the cost of doing business and as more infrastructure projects under the private-public partnership scheme get underway, he said.
Record infra budget
The government has set a record infrastructure budget of over P400 billion next year as it pursues major upgrades of roads, ports, bridges and airports to speed up growth and boost private investment.
Balisacan said these along with finance department’s tapping of the country’s record foreign reserves to pay its foreign debts would ease the upward pressures on the peso next year.
The peso is Asia’s best performing currency so far this year, up more than 7 percent against the US dollar on strong foreign inflows into Philippine stocks and bonds, fueled by forecasts of sustained and resilient domestic growth.
Year-to-date growth is already at 6.5 percent with services and industry (except mining) still driving growth.
Officials said the full-year growth would likely beat the target of 5 to 6 percent and move toward the previously “aspirational” 7-8 percent needed per year to spur employment and curb poverty.
A strong BPO sector, booming construction, increased consumer and government spending, and external trade contributed to the highest quarterly growth since 2010, said
Jose Ramon G. Albert, secretary general of the National Statistical Coordination Board.
Property boom
Among industries, construction posted its highest growth in at least six quarters, jumping 24.3 percent from a year earlier as Metro Manila enjoys the best property boom in two decades. (See table below.)
Public consumption expanded an annual 12 percent in the third quarter, almost double the rate in the second quarter.
Relatively stable prices, steady inflow of remittances, and rebounding exports supported growth, according to the National Economic and Development Authority (Neda).
While export receipts of semiconductors and electronic data processing equipment contracted, both items contributed recently to increased imports, which may mean that manufacturers have been “stocking up” on intermediate inputs in anticipation of recovery in the global demand for electronic products, Neda said.
Agriculture also fared better in the third quarter than in the four previous quarters with increased rice and corn outputs as part of efforts to achieve food self-sufficiency. The weak fishery sector is a concern, however, Balisacan said.
Good governance
In a briefing, presidential spokesperson Edwin Lacierda attributed the high growth rate to “sustained confidence in the leadership of President Aquino and his administration, which has consistently equated good governance with good economics.”
Mr. Aquino, who was elected in 2010, has instituted anticorruption reforms while seeking to boost revenues and improve government spending.
“The Philippine economy has shown both resilience and resurgence despite the global economic slowdown,” Lacierda said.
Finance Secretary Cesar Purisima said confidence in the way the government was being run had encouraged more people to do business in the country.
“The growth rate shows that the economics of good governance, or ‘Aquinomics’ works,” Purisima said in a statement.
The Makati Business Club (MBC) lauded the strong third-quarter performance.
“Good governance is paying off. President Aquino and his economic team must be lauded,” MBC executive director Peter Perfecto said via text message.
Trade Secretary Gregory Domingo said in a phone interview that he was “not surprised” by the 7.1-percent growth for the third quarter because the country was coming from a low growth base.
In the third quarter of 2011, the economy turned sluggish as exporters and other contributors to the economy felt the impact of the triple tragedy in Japan and the flooding in Thailand earlier that year.
“Nevertheless, it is good to post this level of growth for the third quarter. We will continue to help our business people with shared facilities, simplifying and shortening the process of starting a business, and educate entrepreneurs as well as students on how to take advantage of free-trade agreements.
Budget Secretary Florencio Abad said the latest indicators showed that the country faced “very fruitful times ahead” with low inflation and interest rates and increased confidence in government reforms.
Christmas, poll spending
Abad said growth was likely to stay robust in the fourth quarter.
“Public consumption will most definitely stay robust, fueled by high consumption levels during the holidays, continuing investments in public and private infrastructure, and the kick-start of election-related spending this Christmas season,” Abad said in a separate statement.
Abad said this would improve the country’s credit rating further. Both Moody’s and Standard & Poor’s raised the Philippines’ credit ratings to within one rung of investment grade in recent months.
However, Balisacan said there were still external threats such as the “looming fiscal cliff” in the United States and the long-running eurozone crisis.
He also said the government was closely watching the strengthening peso, which could hurt exporters’ competitiveness. With reports from Michael Lim Ubac, Michelle Remo, AFP
Third quarter 2012 growth by industry
Industry/ Group               Growth rate (in percent)
Agriculture                                          5.5
Fishing                                                  -0.6
Industry sector                                 8.1
a. Mining & quarrying                     -2.2
b. Manufacturing                             5.7
c. Construction                                  24.3
d. Electricity,gas and water supply            2.7
Service sector                                    7
a. Transportation, storage and
communication                                 9
b. Trade and repair of motor
vehicles, motorcycles,
personal and household goods 7
c. Financial intermediation           8.3
d. Real estate, renting
& business activity                           7.8
e. Public administration
& defense; compulsory
social security                                    4.3
f. Other services                               5.3

via Riza T. Olchondra, Inquirer.net

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Tuesday, November 27, 2012

Citi also bullish on PH, other Asian economies

Global banking group Citi has joined the growing list of foreign banks that have turned bullish on Asia, saying key economies in the region are becoming the new “safe haven” for portfolio investments on the back of lingering problems in the United States and the Europe.


In a report on its latest outlook for the global economy and for Asia, Citi said emerging markets in Asia were likely to attract more hot money given the changes over the past few years in the contributions of various economies to global growth.
Since the latest global economic crisis, which was punctuated by a recession for many industrialized counties in the West in 2009, Asian economies have been drivers of the global economy.
Meantime, the international financial services firm also said the shifting policy in China toward a more market-determined exchange rate for the renminbi would attract more investments to the East.
Citi said Asia has been stealing the image of the United States and other advanced economies as a safe haven. “Growing confidence over Asia’s growth resilience, strong external and fiscal balance sheets and expectations of some Asian currencies decoupling from (the US dollar index) on the back of regime change in China’s foreign exchange policy toward a more market-based RMB (renminbi) will reinforce the perception of Asian fixed-income market receiving ‘safer-haven’ flows,” Citi said in the report.
In the case of the Philippines, foreign portfolio investments have been partly credited for fueling the significant appreciation of the peso so far this year. The local currency, which has touched the 40-to-a-dollar level Tuesday, has already appreciated by nearly 7 percent since the start of the year.
Documents from the Bangko Sentral ng Pilipinas showed that the country recorded a $2.97-billion net inflow of foreign portfolio investments since the start of the year to November 9. This was lower than the $3.79 billion in net inflow in the same period last year but was significant enough to put an appreciation pressure on the peso, traders said.
According to Citi, central banks of some Asian countries might be prompted to implement policies restricting the entry of foreign portfolio investments given the exchange-rate volatility that these inflows were causing.
Although foreign investments were welcome, economists said too much of such funds could be destabilizing to an economy and the resulting volatility in the exchange rate would be bad for business.
In the case of the Philippines, the central bank said it was not poised to impose restrictions on foreign capital flows. While agreeing that excessive foreign portfolio investments have adverse consequences, the Bangko Sentral ng Pilipinas said outright restriction of foreign capital could drive away even the essential investments.—Michelle V. Remo, Inquirer.net

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The Philippine Economy Grows by 7.1% Growth Third quarter


MANILA – The Philippines said Wednesday that the economy expanded a better-than-expected 7.1 percent year on year in the three-months to September on the back of a robust services sector.
The strong performance in the July-September quarter helped push growth in the first nine months of the year to 6.5 percent, said Jose Ramon Albert, the head of the government statistics board.
He credited the services sector, especially transport, storage and communication, financial inter mediation and real estate.
Albert said the third quarter figure was a sharp improvement from the 3.2 percent growth posted in the same period last year.

via AFP

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Monday, November 26, 2012

PHL is the only nation to have a positive upgrade - IMF Chief

MANILA, Philippines—The Philippines is the only country in the world for which the International Monetary Fund has upgraded its economic growth forecast for 2012, according to visiting IMF managing director Christine Lagarde.


Compared with the once-powerhouse economies of Europe and the United States, which are now struggling, the Philippines is on the road to maintaining an average growth rate of 5 percent next year, Lagarde told a press briefing in Malacañang on Friday.
“I congratulated the Filipino authorities for their excellent economic stewardship during difficult times. In the last decade, the Philippines managed to have an average growth of about 5 percent,” said Lagarde, who met earlier with Finance Secretary Cesar Purisima, Budget Secretary Florencio Abad and Deputy Governor Diwa Guinigundo of the Bangko Sentral ng Pilipinas.
“And you will be interested to know that this year, 2012, at a very difficult time because of the financial crisis in other parts of the world, the Philippines is probably the only country in which we have increased the growth forecast as opposed to other places in the world where we actually decreased our forecast,” said Lagarde, the first woman to head the IMF and who was recently named by Forbes magazine as the 8th most powerful woman in the world.
The Aquino administration has set a growth target of between 5 and 6 percent this year, 6 and 7 percent in 2013, and at least 7 percent in the succeeding years.
Lagarde said she knew that growth in 2012 would be “way in excess of five percent” even as the IMF looked forward to the country’s growth rate for 2013 being in the range of 5 percent as well.
Lagarde is the second important international leader to make optimistic projections about the Philippines’ economic future. Last week, visiting Canadian Prime Minister Stephen Harper’s made the bullish prediction to President Aquino that the Philippines was “an emerging Asian tiger.”
Australia earlier made a similar observation, with the Australian business establishment led by the Asia Society Australia telling the President during the latter’s state visit there last month that the Philippines was now “the fastest-growing economy in Asia.”
Good policy mix
Lagarde described as “excellent” the manner by which the Philippine economy is being managed, citing the country’s respectable growth, benign inflation and stable financial sector in the wake of a crisis gripping many industrialized countries.
“Thanks to these good policies and reforms, the Philippines has become a vibrant emerging market that is approaching investment-grade status,” she said.
Lagarde said there was a good mix of fiscal and monetary policies in the Philippines.
This is partly the reason why the country has managed to grow by a decent pace so far this year despite global economic problems, she said.
“Fiscal policy” refers to the ways by which the government, through the finance and budget departments, collects and spends revenues, and manages its overall finances. “Monetary policy” refers to the manner by which the central bank manages liquidity within the economy to help ensure inflation—the increase in consumer prices—stay within manageable levels and financial markets remain stable.
In the first semester, the Philippine economy grew by 6.1 percent from a year ago, while inflation averaged 3.2 percent in the first 10 months, well within the 3- to 5-percent target for the year.
The Philippine growth performance is considered very favorable, especially in the light of the contraction suffered by advanced economies, including those in the Euro zone and Japan.
In addition, the government’s debt-to-GDP ratio—or the proportion of its outstanding debts to the country’s gross domestic product—has fallen over the years from about 74 percent in the mid-2000s to just about 50 percent today.
The 50-percent ratio for the Philippines is way manageable compared with the average of 90 percent for the euro zone and the over 100 percent for some European countries confronting a debt crisis.
Moreover, the country’s financial sector remains stable, with major banks in the country continuing to post double-digit growth in profits while the euro zone suffers from a crisis in its banking sector.
She said emerging Asian countries like the Philippines play a significant role in driving growth of the global economy at this difficult time when industrialized countries are confronted with economic problems.
Inclusive growth
Lagarde, however, said that despite the favorable economic growth story, the country has its share of problems.
“It is no secret,” she said, that about 42 percent of the Philippine population was living on less than $2 a day.
One advice she gave was for the government to continue with, if not strengthen, programs aimed at addressing inequality.
She said the government is in the right direction in its antipoverty programs, including the conditional cash transfer (CCT) program which gives grants monthly subsidies to selected poorest families.
Economists agree that a key problem of the Philippines is to make the benefits of its growing economy translate into poverty reduction. They said the economic growth of the Philippines is “noninclusive,” as it is enjoyed almost exclusively by the rich and the middle class.
“Certainly looking ahead, we share the government’s view that growth must benefit the broader section of the population. We certainly have research that demonstrate that inclusive growth is more sustainable, and it is really to the credit of this government to make sure that growth is as inclusive as possible and that inequalities can be reduced,” Lagarde said.

From lender to creditor
Lagarde talked at length on the changed relationship between the country and the IMF, following the Philippines’ exit from the fund’s lending program.
“We are looking forward to continuing our partnership in a different setting and status, if I may say so, than in the past, given that the Philippines is a net creditor of the IMF, and has actually participated in the bilateral loans that have been put in place this year in order to contribute to the increased resources of the IMF to deal with the consequences of the financial crisis, including for the crisis (fund) bystanders,” she said.
“So the IMF is very, very pleased for the historical partnership that we’ve had, but particularly pleased that it has now taken the form of the creditor relationship,” she said.
The Philippines earlier this year pledged a $1-billion loan to the IMF as its contribution to the agency’s rescue fund for crisis-stricken countries, mostly in the euro zone.
The Philippines, which enjoys $82 billion in foreign exchange reserves, has shifted from being a borrower-member to a creditor-member of the IMF after having fully paid all its obligations to the multilateral institution in the late 2000s.
Lagarde said the IMF currently has a little over $1 trillion in funds that it can tap to lend to countries in need. So far the amount is deemed sufficient, although she said the IMF cannot totally rule out the possibility to ask for additional contributions from member-countries, like the Philippines, in the future.
Lending partners
Purisima, speaking ahead of Lagarde, thanked her for including the country in her three-nation Asian swing, which also includes Malaysia and Cambodia.
He noted that while the Philippines has changed from being a major customer to a small creditor of the IMF, the agency continues to be a partner in building institutions.
He said that in the Bureau of Internal Revenue, for instance, an IMF adviser was helping the agency develop its information systems “to make sure that we become more efficient in collecting taxes.”
Purisima said the Philippines was looking forward to working with the IMF in building institutions in Mindanao once a peace agreement is signed with Muslim rebels “within the next few months.”
Lagarde had been scheduled to pay a courtesy call on Mr. Aquino at 10 a.m. in Malacañang, but had to be diverted at the last minute to the Coconut Palace where Vice President Jejomar Binay received her instead.
Presidential spokesperson Edwin Lacierda said Mr. Aquino had the flu.
“The President is not feeling well. She will be received by the Vice President,” said Lacierda, who did not elaborate.
After meeting Binay, however, Lagarde still went to Malacañang for a scheduled briefing with the media.
The President is said to be preparing for a trip to Cambodia for the 21st leaders’ summit of the Association of Southeast Asian Nations. He is scheduled to leave for Phnom Penh at 7 p.m. Saturday.
via Inquirer.net, Michael Lim Ubac, Michelle V. Remo

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Saturday, November 24, 2012

Del Rosario tells PMA cadets: ‘We should stand up to protect what is ours’


MANILA, Philippines—Foreign Affairs Secretary Albert del Rosario has told the country’s future military leaders that they must stand their ground in any territorial disputes with China.
The comments from Del Rosario, which were released Saturday, come as disputes over the West Philippine Sea (South China Sea) have escalated recently. China has enraged several neighbors with a map printed in its newly revised passports that show it staking its claim on the entire West Philippine Sea.
A statement published Saturday on the Department of Foreign Affairs website quoted Del Rosario as telling Philippine Military Academy cadets: “What is ours is ours and we should stand up to protect what is ours.”
It said Del Rosario spoke to the cadets on the challenges the country faces in defending its claims to areas in the West Philippine Sea.
via Inquirer.net

Thursday, November 22, 2012

Business sentiment up

BUSINESS CONFIDENCE recovered strongly this quarter as firms expected improvements in their operations and the macroeconomy, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.


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Business confidence, as measured by the overall confidence index of the Business Expectations Survey BSP released yesterday, hit 49.5% in the October-December period. It dwarfed the 38.7% the year before and the 42.5% in the previous quarter.

It was also the second highest score notched since the survey started in 2007, topped only by the 50.6% posted in the fourth quarter of 2010, the central bank noted.

The latest survey, which covered 1,576 respondents, was conducted from October 1 to November 15.

Citing reasons for their optimism, respondents said they expected increased production due to higher orders and more projects, increased consumer demand during the holidays and the harvest season, expanded product lines and enhanced business strategies.

The stable macroeconomy also spurred confidence. Respondents attributed their optimism to stable inflation, low interest rates, strong foreign investment inflows, steady overseas remittances, possible credit rating upgrades, raised growth forecasts and confidence in the Aquino administration.

"The sentiment of businesses in the Philippines mirrored the improved business outlook in China and India, and was in contrast to the unchanged or less buoyant sentiment in neighboring countries such as Singapore, Korea, Hong Kong SAR (Special Administrative Region) and New Zealand," the the central bank said.

By area, the rosy outlook was shared by businesses both in Metro Manila and in areas outside the capital.

By type, importers and exporters alike were more upbeat this quarter, with the former the most optimistic and the latter the most improved. But dual-activity firms -- dabbling both in imports and exports -- held a dim outlook, affected by the ban on fishing in the Visayan Sea and in waters off Zamboanga Peninsula and on the use of plastic bags.

By sector, services led the confidence index, followed by wholesale and retail and construction. Industry saw optimism drop.

"The business confidence should lend greater support to the GDP (gross domestic product) in the near term, particularly to investments and consumption," BSP Assistant Governor Cyd N. Tuaño-Amador said during a press conference yesterday.

For the first quarter of 2013, business confidence fell across the board as firms were wary of the seasonal slump at the beginning of the year. The overall confidence index for the next quarter dove to 43.8% from the 59.6% the previous quarter, though it was still better than the 36.1% the year before. 

via Business World Online

Asian Development Bank Says Philippines is 2nd Fastest Growing Bond Market in East Asia


The bond market in the Philippines was the second-fastest growing among emerging economies in East Asia as of the third quarter, as the country’s buoyant economy boosted appetite for peso-denominated instruments.

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The Asian Development Bank said in a recent report that outstanding bonds in the local bond market registered one of the fastest growth rates in the region as of end-September, as economic problems in Europe and the United States prompted investors to seek higher yields in Asia.

The Philippines was one of the most preferred sites for portfolio investments given a favorable outlook on its economy, the ADB said.

According to the ADB report, the outstanding amount of local currency-denominated bonds from the Philippines reached a dollar equivalent of $91 billion as of the end of September, up by 21.8 percent from that in the same period last year.

Only Singapore posted a faster growth rate of 25.8 percent.

In absolute terms, however, the amount of outstanding bonds in the Philippine market was lower than that for most countries in the region.

Industry players admit that the country’s capital market remains small compared with its regional counterparts.

Growth rates and outstanding amounts of bond markets in the region are as follows: Vietnam, 21.1-percent growth to $21 billion; Malaysia, 20.7-percent growth to $318 billion; South Korea, 16.2-percent growth to $1.37 trillion; China, 12.5-percent growth to $3.65 trillion; and Hong Kong, 3.7-percent growth to $176 billion.

Contradicting the trend in the region, the bond market of Indonesia fell by 0.6 percent to $110 billion.

For the entire region, the outstanding amount of bonds thus stood at $6.24 trillion, rising year on year by 13.9 percent.

“Volatility spillover was directly transmitted to Asian local bond markets during the US and eurozone crises,” said the ADB as it noted the shift in investor appetite to instruments issued from emerging Asian markets.

It said the appetite for portfolio instruments from emerging Asian economies was also reflected in the increase in demand for equities, currencies and money market instruments in the region.

Data on the Philippines also showed that of the P3.8 trillion (or $91 billion) in outstanding bonds by the end of September, about P3.3 trillion was accounted for by government securities while corporate bonds accounted for the balance of P500 billion.

The outstanding amount of Philippine government securities represented a year-on-year growth of 14.7 percent, while that of corporate bonds marked an annual growth rate of 26.1 percent, the ADB said.

Although the increase in foreign portfolio investments is a welcome development, monetary officials said excessive amounts and steep increase could be destabilizing to an economy.

They said these can cause sharp and sudden appreciation of the local currency against the US dollar, adversely affecting exporters.
This is why the Bangko Sentral ng Pilipinas has implemented several measures against excessive inflows.

via Inquirer.net

Sunday, November 18, 2012

IMF’s Lagarde says Philippine Economy Could Grow by As Much as 5%


The Philippines could grow well above 5% this year, International Monetary Fund (IMF) Managing Director Christine Lagarde said on Friday as she noted the “excellent economic stewardship” that has steered the country through continued global troubles.

“I know that the growth in 2012 will be well in excess of 5%. And we are certainly looking forward to 2013 being in the range of 5% as well. This is due in no little part to ... a combination of sound fiscal policy as well as sound monetary policy,” Ms. Lagarde said in a press conference in Manila.

The IMF’s official gross domestic product (GDP) projections for the Philippines are 4.8% for this year and 5% for 2013, while the government is targeting ranges of 5-6% and 6-7%, respectively. As of the first semester, economic growth was a higher-than-target 6.1%.

Ms. Lagarde’s pronouncements would mean the country’s sustaining its growth trajectory -- GDP has grown by an average of 5% in the last decade -- despite the global economic downturn. She stressed, though, that these gains must be made more inclusive, especially as some 42% of Filipinos still live on less than $2 a day.

“Certainly, looking ahead, we share the government view that growth must benefit the broader section of population ... inclusive growth is more sustainable, and it really is to the credit of this government ... that inequalities can be reduced,” she said.

The IMF chief was in the country as part of a tour of Asia. She made a courtesy call to Vice-President Jejomar C. Binay on Friday -- President Benigno S.C. Aquino III called in sick at the last minute -- accompanied by Finance Secretary Cesar V. Purisima, Budget Secretary Florencio B. Abad and Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo.

Ms. Lagarde, the first female to take on the top post of the IMF since its founding in 1945, then visited private sector representatives, particularly asking to meet women business leaders.

She is set to fly out to Cambodia to attend the East Asia Summit this weekend but her stay will be cut short so she can catch a eurogroup meeting in Belgium on Tuesday, where finance ministers are expected to continue debt negotiations with Greece.

Talks are tense as the IMF and the eurogroup disagree on the timeline for Greece to reduce its debt to 120% of its GDP. The IMF stands by the original deadline of 2020, while European finance ministers hope to move it to 2022. Greece cannot be granted its bailout funds of Ä31.3 billion until the issue is resolved.

“It’s not over until the fat lady sings, as the saying goes ... It’s a question of working hard, putting our mind to it, making sure we’ve focused on the same objective which is that ... Greece can operate on a sustainable basis, can recover, can get back on its feet and can re-access market as early as possible,” Ms. Lagarde said.

With debt negotiations protracted, the global economy could continue to look to the Philippines and Asia for growth. The region could take a pivotal role in years to come, she added, serving as the growth engine that will stabilize other countries.

Advanced economies could also learn from Asia how they can pull out of a deep financial crisis, Ms. Lagarde said.

The region must now turn its focus to integration, she said, since closer trade and finance cooperation will be key to keeping the growth momentum. Ms. Lagarde urged the Association of Southeast Asian Nations (ASEAN) to pursue its planned integration by 2015, amid reports the deadline could be delayed.

“Integration is a major factor that has helped improve standard of livings, lift people out of poverty, increase the contribution of the region to global growth,” she said. “If it’s a matter of a few months’ worth of negotiations so details can be worked out and non-trade barriers need to be identified, then so be it. But, the sooner the better.”

Ms. Lagarde also revealed that the IMF is reviewing its official stance towards capital flows to take into account the threat to emerging economies.

Investors have flocked to emerging markets in search for better yields as advanced economies struggle. The surge in portfolio investments can cause exchange rate volatility and asset price bubbles, and can trigger instability when the funds are abruptly pulled out.

“It’s obviously an important [issue] because we have seen capital flows in and out of countries and significant consequences as a result, particularly in terms of appreciation,” she said.

“Certainly, our position is very much based on the latest development that we are observing at the moment and will be settled very shortly, probably with a view to being more flexible than we have been historically.”

The IMF has historically opposed capital controls. It instead prefers macroprudential measures that discourage capital flows, such as building up international reserves, lowering policy rates and reducing government borrowing.

Sought for comment, the BSP’s Mr. Guinigundo interpreted a “more flexible” stance to mean “an open mind on what tools to use.”

Monetary and fiscal policy could act as the first line of defense, macroprudential measures second and, finally, capital controls -- holding periods, taxes, reserve requirements on dollar deposits -- as the last.

“The IMF would not likely call such varied capital flow management measures as heretic but I guess unique individual country circumstances should be considered and when warranted, by all means endorse them,” Mr. Guinigundo said in a text message.

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