MANILA (UPDATE) - The Philippines is less vulnerable to the impact of the British vote to leave the European Union (EU), an analyst said on Thursday.
Luz Lorenzo, an economist at ATR Securities, said the Brexit will have a weak impact on the country's economy due to weak Philippine ties with the UK in terms of trade, investments, and remittances.
“The links with the UK are not very strong, so the impact to the Philippines will be quite weak. What we will be seeing in the weeks and months ahead is after the knee-jerk reaction, then people will realize that the Philippines still is driven by domestic demand and so there may some be changes in perception. I don’t think there’s a remote possibility that because we are driven by domestic demand, that maybe some inflows won't come our way, because in a way, we are protected against this Brexit,” she told ANC's "Market Edge with Cathy Yang."
READ: Britain votes to leave EU
Lorenzo said trading may move sideways to downward in the coming weeks due to volatility in the global market.
The Philippine central bank also said more volatility can be expected in domestic markets in the near term but it is ready to provide liquidity as needed.
"Even as the direct Philippine exposure to U.K. is relatively small, we will watch the impact on us via contagion from moves in the U.S. dollar," Bangko Sentral ng Pilipinas Governor Amando Tetangco said in remarks following the Brexit vote.
"Medium-term, we will look at developments, particularly how the rest of the European Union will react to Brexit," he said in a text message to reporters.
The Philippine Stock Exchange index closed at 7,629.72 points, down 1.6 percent, a smaller decline than seen in nearly all Asian markets after Britain voted to exit the EU.
Lorenzo said the Brexit is feared to have a "domino effect" on the EU, and other rich EU countries may also start leaving.
Meanwhile, Finance Secretary Cesar Purisima said that while the Philippines is less vulnerable than other countries, it is "never immune" to the effects.
"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," Purisima said in a statement.
He added the economy has "a robust domestic consumption core, insulating it from the bulk of Brexit's effects." -- With Reuters