THE PHILIPPINES’ “strong” economic expansion last year despite a slower global economy was credit positive, debt watcher Moody’s Investor Service said Monday, with the upcoming elections seen speeding up growth this year.
Separately, Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr. said in a text message to reporters also Monday that monetary policy settings remained appropriate despite the easing in a number of advanced economies.
In light of the Bank of Japan’s policy easing last Friday, Tetangco maintained that “we don’t have to move in sync.”
“So far, our fundamentals have held up against these and other headwinds, aggregate demand remains firm and inflation expectations are well-anchored. Thus, there is no real urgency to change stance of policy now,” Tetangco said.
While election spending would have a “small positive impact” on the gross domestic product (GDP) and “could raise inflation slightly,” Tetangco said such impact was “not expected to persist.”
“Many of the critical economic reforms have been institutionalized so we can expect continuity of policies,” he explained.
In its latest credit outlook report, Moody’s noted that the Philippine economy grew 6.3 percent during the fourth quarter of 2015—the fastest quarterly expansion last year “as stronger government spending and robust household consumption and services exports buffered the economy against deteriorating global growth.” Full-year growth in 2015, however, slid to 5.8 percent, a four-year low.
“Even the severe El Niño dry spell, which hit farm output, failed to stymie the expansion,” the credit-rating agency added.
For Moody’s, last year’s robust growth was “credit positive because it demonstrates the economy’s resistance to global shocks and points to the government’s ability and willingness to shore up domestic demand amid a weak external environment.”
“This strong performance comes at a time when weak global demand is slowing growth in export-oriented Asian economies and puts the Philippines in a more robust position than many of its regional peers to weather any further global economic and financial market volatility,” Moody’s said.
The debt watcher said it helped that while the Philippines was not entirely immune to the economic slowdown being experienced by neighboring China, “it is less reliant on Chinese demand than many of its regional peers.”
“Whereas many Asian countries count China as their largest export partner, it is the Philippines’ fourth-largest export destination. The Philippines is also much less dependent on commodity receipts for exports or fiscal revenues than its regional peers,” it noted.
For 2016, Moody’s kept its Philippine growth projection of 6 percent. “The public-private partnership program for infrastructure development and a pickup in economic activity as the country gears up for midyear elections will underpin growth,” it said.