Moody’s unit raises Philippines growth forecast

Workers climb scaffoldings of a building under construction on May 31, 2012, in Manila. Moody’s Analytics, the economic research unit of credit watcher Moody’s, said in its latest paper on the Philippines that the country “kicked off 2012 at a blistering pace,” prompting it to upgrade its economic growth forecast for the Philippines in 2012 to 4.7 from 4 percent. AP PHOTO/PAT ROQUE

The research arm of Moody’s Investors Services has raised its economic growth forecast for the Philippines this year to 4.7 percent from 4 percent, citing the government’s ant-corruption drive and big push for infrastructure development that will aid efforts to attract investors.

The revision of the forecast came after the Philippines posted a 6.4-percent growth in its gross domestic product in the first quarter, beating most expectations. It was the second-fastest growth rate for the period in Asia after China’s 8.1 percent.

“The Philippines kicked off 2012 at a blistering pace. This prompted an upward revision to the growth forecast,” Moody’s Analytics, the economic research unit of credit watcher Moody’s, said in its latest paper on the country.

It said the Aquino administration’s focus on good governance was tickling the interest of investors on the Philippines, which used to be out of the radar screen of most foreign firms.

The research firm also expressed confidence that the promotion of public infrastructure among potential investors from the private sector would significantly boost investments in the remainder of the year. The Aquino administration has promised to speed up the implementation of its Public-Private Partnership (PPP) program this year.

“The investment environment in the Philippines has improved over the past year as President Aquino’s plans have begun to take effect, with a focus on infrastructure development, stamping out corruption, and the seemingly obligatory chastisement of his predecessor, Gloria Arroyo, who now sits in jail on charges of electoral sabotage,” Moody Analytics said.

It credited the business confidence resulting from good governance for the recent favorable performance of the Philippines’ stock market. It said that the Philippine Stock Exchange index (PSEi) was so far up 12 percent this year and this growth was faster than most Asian stock market indices.

“These twin policy arms, lifting infrastructure and reducing corruption, should also help to shore up both domestic and foreign direct investment, lifting the economy’s long-term growth prospects,” it said.

The 4.7-percent growth projection of Moody’s Analytics, however, was below the government’s official target of 5 to 6 percent. It said the gap between its projection and the government’s was the view on exports and remittances.