THE Philippine economy could be tested by a cooling property market, which would weigh on banks’ loan portfolios, an international economic watcher has warned.

As such, financial surveillance must be tightened, especially on large conglomerates, the Asean+3 Macroeconomic Research Office (AMRO) suggested in a report on Tuesday.

But, despite the challenges to the Philippines’ growth, “the current wave of reconfiguration of global supply chains has opened a window of opportunities”, the report added.

AMRO, which monitors the economies of the 10 Asean nations, as well as China, Japan and South Korea, has flagged the risk of a cool-off in a real estate market that was largely driven by a boom in the business process outsourcing (BPO) and online gaming industries.

With BPO and online gaming making up between 60 per cent and 70 per cent of office occupancy, curbs on new online gaming operator licences and on new economic zones in the national capital region could push down office and housing rents and occupancy rates.

AMRO noted that the Philippine authorities believe that the impact from the slowing BPO and gaming industries “will be moderate and manageable”, as property demand would still be high.

“Nevertheless, its impact is not contained within the property market, considering its backward and forward linkages to the rest of the economy,” the research outfit said in its annual consultation report, even as the policy restrictions extend to major cities outside Metro Manila.

AMRO recommended that the Philippines “focus more on supporting growth while guarding financial stability” and deliver structural reforms “to improve the business environment, attract more foreign investment, and lay a solid foundation for long-term sustainable development”.