Connect with us

Hi, what are you looking for?

News

S&P raises growth forecast for PHL

PHILIPPINE STAR/ MICHAEL VARCAS

THE PHILIPPINES is likely to grow by 5% this year, boosted by the stronger-than-expected rebound in the third quarter, according to S&P Global Ratings.

However, S&P warned that the Omicron variant of the coronavirus disease 2019 (COVID-19) could pose a new risk to the region’s recovery.

“Growth in the Philippines surprised on the upside with year-over-year expansion of 7.1% [in the third quarter]. This surpassed the consensus expectation for a 4.8% increase, on strong consumer activity,” S&P said in a note on Tuesday.

The debt watcher’s latest estimate of 5% gross domestic product (GDP) growth is faster than the 4.3% forecast it gave in August and matches the upper end of the government’s 4-5% growth forecast for the year. Year to date, Philippine economic growth is at 4.9%.

Household spending, which accounts for about three-fourths of GDP, rose by 7.1% year on year in the third quarter.

The Philippines was an outlier compared with its regional neighbors which saw weaker economic activity in the July to September period amid a Delta-driven surge, the ratings agency said.

The country is expected to grow faster this year than Indonesia (3.3%), Malaysia (2.6%), Vietnam (1.9%), Thailand (1.2%), but slower than Singapore (6.5%), based on S&P projections.

However, it should be noted that the Philippine economy had the steepest contraction in the region at 9.6% in 2020 as it imposed one of the world’s strictest and longest lockdowns.

S&P said Philippine GDP is projected to rise by 7.4% in 2022. This is slightly slower than the 7.7% it gave in August due to the base effect of the stronger economic growth it forecasts for 2021.

S&P noted Southeast Asia’s growth is gaining traction as restriction measures are gradually relaxed, vaccination rates are picking up and travel restrictions being eased.

“This is leading to a gradual improvement in domestic demand and widening improvement in manufacturing activity in the fourth quarter,” it said.

However, S&P warned that the Omicron variant may threaten the region’s rebound, as governments may reimpose short-term containment measures.

“We believe the new Omicron variant is a stark reminder that the COVID-19 pandemic is far from over… We believe this shows that, once again, more coordinated, and decisive efforts are needed to vaccinate the world’s population to prevent the emergence of new, more dangerous variants,” S&P said.

The Philippines has already fully vaccinated 40.58% or 43.87 million of its population. Officials are hoping to vaccinate 70 million Filipinos by the end of 2021.

Meanwhile, S&P expects inflation in the Philippines to average 4.5% in 2021, above the 2-4% target of the central bank. It is expected to ease to 2.4% in the next two years.

It also sees the Bangko Sentral ng Pilipinas keeping its key policy rate steady until the end of 2022, before raising rates to 2.75% by the end of 2023.

GLOBAL SLOWDOWN UNLIKELY
Meanwhile, Fitch Ratings in a separate note said that it may be too early to consider the impact of the Omicron variant on global economic forecasts since there is no clear data yet on its transmissibility and severity.

“We currently believe that another large, synchronized global downturn, such as that seen in (first half of 2020), is highly unlikely but the rise in inflation will complicate macroeconomic responses if the new variant takes hold,” it said.

The possibility of nationwide lockdowns to curb the spread of Omicron will continue to be a risk to the global economy, Fitch said. It noted that tourism and travel will likely be disrupted once again, and the shift to services from goods consumption will likely slow.

“However, recent increases in inflation will complicate any policy response to Omicron, which could have an inflationary effect if new lockdowns or voluntary social distancing constrain labor supply recoveries or exacerbate global supply-chain shortages and bottlenecks. Hence, we believe central banks could be wary of delaying the normalization of monetary policy settings in response,” Fitch said. — Luz Wendy T. Noble

Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Latest

Editor’s Pick

TikTok is expected to ride out the advertising slowdown, as the Chinese-owned social media titan becomes an outlier to the wider industry slowdown. According...

Editor’s Pick

The average start-up loan has fallen over 138 percent in the past year to just over £142k, from £339k in 2021. Thats according to...

Editor’s Pick

The government risks “sleepwalking” into a food supply crisis unless it provides crucial support for British farmers struggling with the soaring cost of fuel,...

Editor’s Pick

Britain’s retailers benefited from a November sales boost fuelled by Black Friday discounts and colder weather as consumers bought winter coats, hot water bottles...

Editor’s Pick

The biggest sector of the economy remained in a downturn last month as new orders continued to fall owing to the cost of living...

News

1 of 2 AL WAKRAH, Qatar — Goalkeeper Dominik Livakovic saved three spot-kicks as Croatia beat Japan 3-1 in a penalty shootout to reach...

You May Also Like

News

BW FILE PHOTO GROSS BORROWINGS by the National Government reached P2.6 trillion as of end-September as it continued to raise funds to respond to...

News

REUTERS By Luz Wendy T. Noble, Reporter The country’s foreign exchange buffers slightly increased as of end-October as the value of the central bank’s...

News

KARASOLAR.COM TENA, Ecuador — Ecuador’s rainforest Achuar people say their ancestors long dreamed of a “fire canoe” or “electric fish” that would let them...

News

COVID-19 has had a significant impact on the mental health of Filipinos across different groups all over the archipelago. From frontline workers, parents balancing...

Disclaimer: Respect Investment.com, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 Respect Investment. All Rights Reserved.