International debt watcher Standard & Poor’s Ratings Services (S&P) sees relatively brighter prospects for the Philippines in the near term on the back of sustained expectations of robust remittance flows and outsourcing revenues coupled with sound fiscal policy.
Next year’s presidential election would not pose much risk if President Benigno Aquino III’s successor could sustain the fiscal reforms put in place as early as the Arroyo administration, Kim Eng Tan, S&P senior director for sovereign and international finance ratings for Asia-Pacific, told a webcast yesterday.
Tan said S&P’s stable outlook on the Philippines remained relevant at the moment as strong remittance inflows as well as lower external debt would likely continue amid a low interest rate environment and improved domestic liquidity. “I don’t think there will backsliding,” he said.
Tan credited the Aquino administration for bringing about not only stability but also continuity of sound fiscal policy in play over the past decade.
Tan said they were looking forward to see if the next president would be able to keep these sound fundamentals. “The next elections will be important only to the extent that if the political stability brought about by the Aquino presidency will be disrupted, if the next president will be weak and there will be a constant threat of non-confidence and military coup, then some of the positive sentiments around the Philippine economy may reverse,” he said.
But in general, the Philippines’ economic picture looked “relatively bright” on the back of strong domestic growth drivers amid external shocks such as the slowing Chinese economy, said Paul Gruenwald, S&P managing director and chief economist for Asia-Pacific.
“We think the Philippines has been one of the success stories in Asia over the last few years,” Gruenwald said, noting that they forecast 5.7-percent and 5.9-percent growth in 2016 and 2017, respectively—only lower than the projections for China and India in the next two years.
This year, S&P expects the Philippine economy to expand by 5.6 percent, also the third-fastest growth projection in the region.