S&P raises growth forecast for Philippines

An overview of cranes loading ships with containers at the Manila South Harbor port taken in 2009. Standard & Poor’s raised its growth forecast for the Philippines for 2012, as it said the growth performance of the country was less affected by unfavorable global developments than those of other emerging Asia-Pacific economies partly because it relied less on exports to fuel economic growth. AFP PHOTO/TED ALJIBE

International credit watcher Standard & Poor’s raised its growth forecast for the Philippines for 2012, even as it downgraded its outlook for other economies in Asia and the Pacific, saying the country has the capability to withstand unfavorable developments in the global economy.

In its latest report titled “Asia Pacific Feels the Pressure of Ongoing Global Economic Uncertainty,” S&P said it now expected the Philippine economy to expand by 4.9 percent, instead of the earlier projection of 4.3 percent, this year.

On the contrary, the credit-rating firm lowered its growth projections for several economies and kept its previous forecasts for a few others in the region to take into account the impact of the prolonged debt crisis in the eurozone, the still lackluster growth of the United States and the slowdown of China and India.

S&P said the unfavorable developments in the world’s biggest economies were expected to dampen growth of many Asia-Pacific countries, except for the Philippines.

The growth forecasts have been reduced by one percentage point for Hong Kong and India, which S&P now sees growing by just 1.8 percent and 5.5 percent, respectively.

The projections have been cut by about half a percentage point for China to 7.5 percent; Japan, 2 percent; South Korea, 2.5 percent; Singapore, 2.1 percent; and Taiwan, 1.9 percent. For Australia, the growth forecast was cut to 3 percent from 3.2 percent.

“The forecasts for other Asian economies remain unchanged except for the Philippines, which went to 4.9 percent from 4.3 percent, reflecting the ongoing strength of that domestic economy,” S&P said in the report.

The outlook of S&P for the Philippines, however, was still below the government’s official target of between 5 and 6 percent.

The government’s economic officials believed that the official target would be achieved, citing the above-target growth in the first semester of 6.1 percent. This was one of the fastest growth rates in the region.

The growth performance of the country was less affected by unfavorable global developments than those of other emerging Asia-Pacific economies partly because it relied less on exports to fuel economic growth. Export earnings account for about 30 percent of the Philippines’ gross domestic product. In some neighboring countries, exports account for more than half of GDP.

The weakness of the economies of the United States and Europe and the slowdown of China and India are weighing down on the growth prospects of many emerging markets because these big economies are major export markets.

Meantime, Philippine government officials credited the boost in public spending, strong household consumption (supported by remittances) and a highly liquid banking sector for the domestic economy’s growth performance.

“S&P’s upward revision of the GDP growth forecast for the Philippines validates our view that home-grown sources of resilience can buffer the economy from the external headwind,” Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas told reporters.