Moody’s raises PH growth forecast for 2012
Citing strong quarter, gov’t says GDP may rise to 6.5%By Michelle V. Remo, Riza T. Olchondra |Philippine Daily Inquirer
Moody’s Investors Service has upgraded its growth forecast for the Philippines for this year from 5.5 to 6.3 percent, citing favorable developments in the domestic economy that have beaten most expectations.
Also, Moody’s said the Philippines would be the only country among similarly rated peers to enjoy faster economic growth, lower inflation, stronger currency, higher foreign exchange reserves, and easing debt burden this year compared with last year.
Moody’s noted that the country would be able to thrive even as the global economy remains fragile due to the crisis in the eurozone and fiscal problems in the United States.
“In a global environment of slowing growth, the Philippines has exhibited robust growth performance while improving its overall credit profile,” it said in a credit analysis on the Philippines released Tuesday.
Moody’s decision to raise its growth forecast for the Philippines was prompted by the country’s growth performance in the third quarter, when it posted a 7.1-percent growth during the period—the fastest in Southeast Asia.
The government said that, because of the increase in household consumption and spike in public spending, the full-year growth rate would likely exceed the official target of 5 to 6 percent.
According to Socioeconomic Planning Secretary Arsenio Balisacan, robust growth in the fourth quarter may even drive the domestic economy to a full-year growth of about 6.5 percent.
“In fact, [the 6.5-percent projection] is much closer to our aspirational target of 7 to 8 percent annual real GDP growth that we have set out in the Philippine Development Plan for 2011-2016,” said Balisacan, who is also the director general of the National Economic and Development Authority.
In a briefing, Balisacan said the case for a more rapid full-year expansion would be bolstered this quarter due to the holidays, when “robust” spending traditionally takes place.
Demand for food, merchandise such as clothing, and entertainment are especially high during this season. Both the consumer and industrial sectors also tend to use up more electricity and other utilities during this time, Trade Secretary Gregory Domingo said in a phone interview.
Also, growth may come in between 6 and 7 percent in 2013, and 6.5 and 7.5 percent in 2014, Balisacan said.
Government expects to see improved activity in various industries, including electronics, as the world economy is expected to recover in 2013 and 2014.
Moody’s expressed confidence that strong domestic demand in the country would be sustained, citing rising remittances and state measures to improve tax collection. It said inflation in the country was reported at 3.2 percent for the first 11 months, while foreign exchange reserves stood at a historic high of about $84 billion.
Also, it said, the peso appreciated by over 6 percent against the US dollar since the start of the year, while the national government’s debt stock, as a percentage of the country’s gross domestic product, fell to about 50 percent this year from over 70 percent in the mid-2000s.