An economist of the ING Bank NV Singapore sees continued outflows from the Philippines but not as large as those experienced during the global economic crisis in 2008-09.

Tim Condon, managing director and Head of Research, Asia of ING Bank NV Singapore, in a briefing Wednesday, said outflows cannot be prevented given the improvement in advanced economies.

Bangko Sentral ng Pilipinas’ data show that in the first two weeks of this year, foreign portfolio investments, otherwise known as "hot money" due to the speed it comes in and out of the economy, has been in net outflow.

Net outflow as of the week ending in January 10 this year reached $719.06 million.

This transpired after the total outflows amounting to $ 1.1 billion way exceeded the $380.83 million inflows during the two-week period.

Outflows from emerging markets have noticeably increased since the second quarter of 2013 after then Federal Reserve Chairman Ben Bernanke announced the possibility of tapering of the Fed’s $ 85 billion monthly stimulus program if the US economy continues to post gains.

Analysts have earlier projected US monetary officials to start cutting the stimulus program by October but this did materialize after the central bank officials said improvements in the US economy were not enough to cut the monthly bond buying program then.

Last December, the Federal Open Market Committee announced its decision to slash by $10 billion the stimulus program effective January 2014.

Analysts are now projecting continued but gradual cut in the stimulus program.

This development revived investors’ preference for investments options in advanced economies as shown by the outflows in emerging markets.

Condon said stability in EMEs’ financial markets is expected if there would be steady cut in the Fed’s stimulus program.

He noted that “investors look at EMs as a whole,” thus, “in a crisis, we are bulked together regardless of each (economy’s) fundamentals.”

“But once things settle down, they (investors) will see the Philippines is okay,” he added.*PNA

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