Neda Director General and Economic Planning Secretary Emmanuel F. Esguerra said the country would be shielded by its “strong macroeconomic fundamentals” from Brexit’s negative consequences to global markets.

“The direct effect of Brexit does not seem substantial even as we expect that domestic financial markets will experience volatility and huge swings in capital flows in the short term due to uncertainty. Despite this knee-jerk reaction, the economy stands on solid footing given its strong macroeconomic fundamentals,” Esguerra said.

In a referendum last week, the United Kingdom voted to leave the European Union, severing not only political but also economic ties with the mainland.

The Philippines’ exposure to the UK’s economy was “minimal,” Esgeurra said, pointing out that merchandise exports and imports accounted for just 0.9 per cent and 0.5 per cent, respectively, of total two-way trade between 2010 and 2015.

“However, the indirect effects via its impact on the EU bloc and the knock-on effects on the rest of the global economy bears watching. Diversification of export markets and products, increasing competitiveness and strengthening domestic demand would therefore be important,” Esguerra said.

As for the country’s external debt, borrowings from three European countries—France, Germany and the UK—totalled $6.8 billion or a mere 8.8 per cent of the foreign debt stock, which remained mainly denominated in US dollar (63 per cent) and Japanese yen (12.4 per cent).

“As such, the depreciation of the euro and the UK pound is not expected to have significant effects on debt service,” the outgoing Neda chief said.

As far as investments were concerned, net equity placements from the UK were equivalent to an average of only 4.9 per cent of the total from 2010 to 2015, although Neda noted that the share jumped to 20.2 per cent last year.

In terms of remittances, cash sent home by Filipinos living or working in Britain accounted for just 5.3 per cent on the average during the 2010-2015 period, although inflows were growing by 9.5 per cent.

“Annual overseas Filipino workers’ (OFW) deployment to the UK accounted for only 0.26 per cent of the total in 2010-2014. In 2014, OFW new hires to the UK consisted mostly of nurses, at 88 per cent,” Neda added.

“Also, tourist arrivals from the UK accounted for 2.7 per cent in 2010 to 2015 and grew by 9.3 per cent. As with remittances, tourist arrivals from the UK showed resilience in times of adverse events,” according to Neda.

Bangko Sentral ng Pilipinas (Philippine Central Bank, BSP) Governor Amando M. Tetangco Jr. earlier warned of spillover effects in domestic markets, which are expected to be more volatile in the near term.

The BSP was nonetheless “ready to provide liquidity to our market as needed,” Tetangco had said.

Outgoing Finance Secretary Cesar V. Purisima, meanwhile, had pointed out that the Philippine economy “has a robust domestic consumption core, insulating it from the bulk of Brexit’s effects.”