Debt watcher Standard & Poor’s (S&P) has raised its economic growth forecast for the Philippines for 2016 to 6 percent despite risks from a change in administration in June.
S&P upped not only the projection for this year, which used to be 5.7 percent, but also the forecast for next year to 6.3 percent from 5.9 percent previously.
The debt watcher’s 2016 growth projection for the country was nonetheless below the government’s target of 6.8-7.8 percent, following last year’s 5.8-percent gross domestic product (GDP) expansion.
“The Philippines has been a bright spot, with strong growth driven by consumption and business process outsourcing,” S&P said in a report titled “China, Commodities and Capital Flows Make for a Choppy Ride for Asia-Pacific in 2Q 2016.”
But S&P said “there is some political transition risk as well due to this year’s elections.”
In the report, the debt watcher said it expected inflation to settle at 2.5 percent this year and 3.3 percent in 2017, within the government’s target range of 2-4 percent for both years. End-2015 inflation was below target at 1.4 percent.
By year’s end, S&P said it expected the exchange rate weakening to 47.96 to $1 from 47.17 at end-2015 before slightly rebounding to 47.84 by end-2017.
The unemployment rate, meanwhile, is expected to further slide to 6 percent this year and 5.7 next year from the projected 6.3 percent last year as well as the actual jobless rate of 6.8 percent in 2014.