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‘Philippines among fastest to recover this year’
S&P says credit upgrade possible
MANILA, Philippines — The Philippines may emerge as one of the fastest-growing economies in the region over the next two years, according to US-based credit rating agency S&P Global Ratings.
The debt watcher sees the Philippine economy rebounding with a growth of 9.6 percent this year and 7.6 percent next year after shrinking by 9.5 percent in 2020.
S&P’s latest growth projection for the Philippines is the second fastest after Vietnam’s 10.9 percent, but faster than Malaysia’s 7.5 percent, Singapore’s six percent, Indonesia’s 5.4 percent, and Thailand’s five percent.
For 2022, the credit rating agency said the Philippines may post the biggest GDP growth, higher than Vietnam’s 6.8 percent, Indonesia’s and Malaysia’s 5.2 percent, Thailand’s 3.9 percent, Singapore’s three percent, Taiwan’s 2.5 percent.
S&P has affirmed the BBB+ or two notches above minimum investment grade credit rating and stable outlook for the Philippines in May last year.
“The stable outlook reflects our expectation that the Philippines’ orthodox policymaking will continue to underpin its credit metrics, and that the economy will rebound strongly in 2021,” S&P credit analyst Andrew Wood said.
Wood said the Philippines’ credit rating could be raised over the next two years if the economy recovers much more quickly than expected.
Likewise, he also said the Philippines could receive a credit rating upgrade if the government makes significant achievements in its fiscal reform program resulting in the lowering of the net general government indebtedness to below 30 percent of GDP.
“We may also raise the rating if we believe the institutional settings that have contributed to the significant credit metric improvements over the past decade or so will persist,” Wood said.
According to S&P, the Philippines’ credit rating could be downgraded if the economy suffers from a sharper and more prolonged downturn than expected, leading to a material deterioration in fiscal and debt positions.
In its latest Asia-Pacific sovereign rating trends 2021 report, S&P said the pandemic remains the key risk factor facing the region in the next six to 12 months.
It also said Asia-Pacific sovereign rating outlooks are mostly stable despite COVID-19 related setbacks.
“The successful development of a few COVID-19 vaccines brings optimism that the pandemic will soon be beaten. However, vaccine supply is limited by factory capacity. Many people also have doubts about getting inoculated with a new vaccine,” S&P said.
Antonio Joselito Lambino II, managing director of the Center for Communication and Investor Relations at the Bangko Sentral ng Pilipinas (BSP), said during the first general membership meeting of the Philippine Association of National Advertisers (PANA) the Philippines and other countries across the globe has been seriously hit by the COVID-19 pandemic.
“The country’s robust macroeconomic fundamentals have helped the country navigate through the crisis. These fundamentals remain strong, price pressures remain manageable, domestic liquidity remains ample. Moreover, the banking sector remains stable a resilient,” Lambino said.
Lambino said the Development Budget Coordination Committee (DBCC) sees the country’s economy rebounding with a GDP growth of 6.5 to 7.5 percent this year and eight to 10 percent next year.
Source: https://www.philstar.com/business/2021/01/29/2073762/philippines-among-fastest-recover-year