The Philippines and its neighbors in Southeast Asia are likely to post slower-than-expected economic growth over the next six to 12 months due to a weak global economy.
Moody’s Corp. unit Moody’s Analytics made the projection based on its expectation that the anemic performance of the US and eurozone economies will continue to weigh on emerging markets.
“The downbeat global environment will weigh on growth across five Asean members—Indonesia, Thailand, Malaysia, Singapore and the Philippines—for the remainder of 2011 and into 2012,” Moody’s Analytics said in its latest study.
The United States and the eurozone are two of the biggest export markets of the Philippines and other Southeast Asian countries.
Given this backdrop, Moody’s Analytics said central banks in the region may be forced within the short term to cut policy rates.
Many central banks of emerging economies have stopped raising interest rates amid the ill effects of the anemic global economy.
Moody’s Analytics said the current global economic picture may be sustained for at least the short term, and this could eventually prompt central banks in Southeast Asia to increase interest rates.
In the case of the Philippines, the Bangko Sentral ng Pilipinas raised interest rates twice in the first half to curb inflation.
The BSP has not made any move on the rates since then to avoid causing another drag on the economy.
The BSP’s overnight borrowing and lending rates now stand at 4.5 and 6.5 percent, respectively.
The country’s exports so far this year reflect the impact of weak global demand.
Philippine exports fell 15.1 percent to $4.052 billion in August from $4.77 billion in the same period last year.
Exports of electronics, the country’s main export product that accounts for about 60 percent of total, dropped by about 31 percent to $2.07 billion from $2.99 billion over the same period.