Asset prices in RP exceed pre-crisis levels: World Bank
By Michelle Orosa, ABS-CBN News | 11/05/2009 11:00 AM
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MANILA - The World Bank warned that asset prices in the Philippines are already rising, particularly those in the stock market.
While the multilateral lender upgraded its growth forecasts for the country--from -0.5% in July to 1.4% for 2009, and from 2.4% to 3.1% in 2010--World Bank Senior Economist for the Philippines Eric Le Borgne said share prices at the Philippine Stock Exchange (PSE), the local bourse, are already rising beyond pre-crisis levels.
"Prices at the PSE shot up to levels higher than before the Lehman collapse. Some asset prices already exceeded pre-crisis levels. This is a challenge for monetary policy," he said during a press briefing for the launch of its East Asia and Pacific Update report on Wednesday.
Le Borgne, however, stressed that the outlook improved as stimulus kicked in during the second quarter, leading to a 1.5% growth. Among the growth drivers he mentioned were the continued strength in overseas Filipino remittances, a strong performance in the services sector, particularly the BPO industry, and the slow recovery of exports and corporate sectors.
Monetary policy
World Bank Regional Chief Economist Vikram Nehru noted that while fiscal stimulus remains crucial to the economic recovery of the region, central banks in East Asia and the Pacific may now have to review monetary policy, particulalry loose monetary stances and curency flexibility.
"We're beginning to see formation of asset bubbles in some countries, particularly in the equities market and in the rise in property prices. This is a cause for concern. The issue is now how countries will slowly withdraw fromloose momnetary policy," he said. By Michelle Orosa, ABS-CBN News
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