The Philippine economy will remain one of the most dynamic in the region amid a marked decline in household wealth across Asia, according to the recent Allianz Global Wealth Report.
Allianz released the Allianz Global Wealth Report, which assessed the global wealth and debt situation.
“Despite these external factors, the Philippine economy grew by a healthy 6.2 percent in 2018. A slowdown is expected in 2019 but fundamentals remain very strong. Country’s expected GDP growth will be above that of many developed and developing economies.” said Efren Caringal, chief financial officer of Allianz Philippines.
Wealth and debt indicators also remained positive, even with domestic inflation rising markedly to 5.2 percent in June 2018 from 2.9 percent in 2017. Caringal added that headline inflation has since cooled down, falling to a near three-year low of 1.7 percent last month.
Philippine deposit and loan growth moderated in 2018: Consumer loans increased by 11.5 percent, against 17.2 percent in 2017, and deposits advanced by 8.9 percent (versus 11.6 percent in 2017).
“This resilience is remarkable considering the hostile global economic context, and bodes well for short- to medium-term growth,” Caringal said.
The report showed a simultaneous decline in financial assets held by private households globally in 2018, the first time since the financial crisis more than a decade ago.
Gross financial assets declined by 0.4 percent in emerging-market economies, but the drop was more pronounced in Asia (excluding Japan) at 0.9 percent, the report showed.
This was triggered by a sharp 14 percent fall in securities such as equity and investment funds, although bank deposits and insurance and pensions grew healthily by 8.7 percent and 8.2 percent, respectively, in Asia.
Savers worldwide found themselves in a bind, due to the escalating trade conflict between the United States and China, Brexit and increasing geopolitical tensions, the tightening of monetary conditions and the (announced) normalization of monetary policy, the Allianz Global Wealth Report said.
The 2018 Allianz Global Wealth Report found that global gross financial assets of private households fell by 0.1 percent and remained more or less flat at 172.5 trillion euros. Global equity prices fell by around 12 percent in 2018, which had a direct impact on asset growth.
“The increasing uncertainty takes its toll,” said Michael Heise, chief economist of Allianz Group. “The dismantling of the rule-based global economic order is poisonous for wealth accumulation. The numbers for asset growth also make it evident: Trade is a no zero-sum game. Either all are on the winning side – as in the past – or all are on the losing side – as happened last year. Aggressive protectionism knows no winners.”
Worldwide household liabilities rose by 5.7 percent in 2018, a tad below the previous year’s level of 6.0 percent, but also well above the long-term average annual growth rate of 3.6 percent. The global debt ratio (liabilities as a percentage of gross domestic product or GDP), however, remained stable at 65.1 percent, thanks to still robust economic growth.
The ranking of the richest countries/regions (financial assets per capita) is again topped by the USA, replacing Switzerland, not least thanks to the strong dollar. Singapore climbed to third place in 2018 capturing, for the first time, the crown as the richest country/region in Asia.
Looking at how the list has changed since the turn of the century, the rise of Asia becomes evident: The big winners include Singapore (+13 places) and Taiwan (+10 places) as well as – last year’s setback notwithstanding – China (+6 places) and South Korea (+5 places).