MANILA, Philippines - International credit rating agency Standard & Poor’s (S&P) upgraded its economic growth forecast for the Philippines to 4.9 percent from the original 4.3 percent.
According to S&P,economic expansion could hit 4.9 percent this year, faster than the previous target of 4.3 percent, “reflecting the ongoing strength of the domestic economy,” Among Asia-Pacific countries, only the Philippines’ outlook was upgraded by the credit rater.
Still, the revised forecast fell below the government’s five to six-percent target for the year. The economy grew by 6.1 percent in the first semester.
S&P, in a report titled “Asia-Pacific Feels Pressure of Ongoing Global Economic Uncertainty” released yesterday, further projected that growth could slightly pick up to five percent next year before slowing to 4.8 percent in 2014.
“Although Asia Pacific has recorded strong GDP (gross domestic product) growth relative to other global economies, Standard & Poor’s has observed a continued change in the region’s economic barometer,” it said.
“The global economy is still travelling a volatile road. Continued pressures in the European Economic and Monetary Union (euro zone) and the US are being felt across the world, including (the) Asia-Pacific (region),” it added.
Fears of a China’s hard landing were also taken into account, S&P said, while the possibility of “any oil price shock” though “currently remote” is not being ruled out.
The Philippines is seen to be in a better position to weather any worsening of the euro zone debt crisis, with trade to the region just accounting to 54.2 percent of GDP compared with those of export-led Singapore and Hong Kong—more than 300 percent-- which are most vulnerable.
Bank deleveraging is also not likely to have an impact, S&P said, as claims of euro zone banks to the country only totaled to 8.1 percent of GDP as against Hong Kong’s 156.5 percent.
GDP is the sum of all products and services created in a country. A lesser proportion of trade and bank claims to Philippine GDP mean the economy could still perform well should the debt crisis worsen.
On the other hand, Philippines is seen “most exposed” to oil price shocks—such as higher oil prices in the world market and supply constraints-- due to the country’s dependence on imported petroleum products. - By Prinz P. Magtulis (Philstar News Service, www.philstar.com)