S&P: Improving global economy a boon to PH


MANILA, Philippines—An improving global economy and favorable local developments are increasing the Philippines’ chances of getting an investment grade soon, according to ratings agency Standard and Poor’s.

S & P has issued a new report saying that the Philippines and its neighbors will benefit from improving economic indicators in the United States, the world’s largest economy.

S & P likewise cited developments in China and international efforts to address the crisis in the euro zone and deflation in Japan.

The United States, the euro zone, China and Japan are four of the biggest export markets for many emerging Asian countries, including the Philippines.

“For the Asia Pacific region, which has endured half a decade of leaden skies hanging over the global economy, some rays of sunshine could burst through in 2013!” S&P said in the report titled “Asia Pacific Sovereigns: A Break in the Clouds” released Wednesday.

The credit watchdog also highlighted its perception of favorable political conditions in the Philippines that bode well for the performance of the domestic economy.

“In our view, the current administration, which took office in June 2010, possesses a level of legitimacy, support and stability that reduces political uncertainty and allows for improved legislative efficiency, S&P said.

“This conducive political setting enables the administration to focus on its key policy objectives of fiscal consolidation, increased infrastructure provision and poverty reduction,” it added.

S&P currently assigns the Philippines a rating of BB+, which is just a notch below investment grade.

Representatives of S&P were in Manila from March 11 to 13 to meet with the government’s economic officials and to assess the overall economic picture in the country.

It expects the Philippine economy to grow by 5.9 percent this year, slower than last year’s 6.6 percent but faster than projections for advanced economies.

It sees inflation to average at 3.8 percent this year.

The Philippines was given a “positive” outlook, which means the current rating may be raised to investment grade if the favorable trends continue.

These include improving fiscal condition of the government, robust pace of economic growth, benign inflation, stable banking sector, and rising foreign exchange reserves.

Government officials are pitching for an investment grade, claiming that many of the country’s economic indicators are already comparable to those of countries enjoying investment grade.

They said credit rating firms were actually behind the international capital markets, which price bonds from the Philippines as if the country had already secured investment status.

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  • kismaytami

    Let’s prepare for a gradual outflow.

  • adscity_info

    Disney Land Philippines ang sagot sa kahirapan.

  • Dy Pailad

    Bad news for UNA and GMA cabal. I can’t wait to read Tiglao’s column on this topic.

  • Weder-Weder Lang

    You be the judge:

    “Improving global economy a boon to PH.” —  S&P

    “Improving global economy will attract hot money outflow from emerging economies to developed economies.” — US Fed Ben Bernanke during congressional hearing

    “Improving global economy will reverse the tide or flow of hot money back to the US and EU. When the tide goes out, you’ll know who’s swimming naked.” — Warren Buffett on CNBC interview with Maria Bartiromo

    “The continuous inflow of hot money into our stock market is a sure sign of the world’s confidence in Daang Matuwid. A stronger Peso is a a sign of a stronger republic.” — President Aquino

    • von_ami

      Capital outflows may be offset by our international reserve which is stood at 84+ billion US dollars. So there is no much to worry about.

      Another, the Philippines is a service driven economy, meaning we are less sensitive to what is happening from outside world because our economy is driven by local economic activities (supply and demand). We are resilience, with what is happening  in the two biggest economic zones – Europe and USA, this only proves that the Philippine is in deed, can stand to weather volatility due to this EU and US fiscal problems;  year on year our local investors are diversifying their investment to key sunshine industries e.g. tourism, agriculture, energy, etc. that eventually will lead to create massive employment opportunities to the masses; our demographic population are very young and highest in Asia, hence, very appealing to foreign investors to invest in health, infrastructure, and manufacturing since there is a huge demand in these respect. 

      Besides, this capital outflow scenario will also provides greater opportunity to our OFW to invest in PSE through or in another to buy back those stocks sold by foreign investors, thereby replacing capital outflow (hot money) with our OFWs capital infusion in the stock market.  

      • Weder-Weder Lang

        Thanks for trying.

  • Iggy Ramirez

    I feel like S&P is fanning our ásses. I’m not exactly sure why.

  • Hayek_sa_Maynila

    So does this mean that the S&P warning for Asia a few days ago that a recovery in the developed economies could lead to capital outflows from Emerging Asian economies does not apply to the PHL? 

    • Tristanism

      I thought about that, too. Nakakalito. :)

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