PH in for slower growth in 2014, says Moody’s

The Philippines and the rest of Asia Pacific may see economic growth decelerate this year amid increasingly challenging conditions within and outside the region.

Moody’s Analytics, the research arm of credit rating agency Moody’s Investor Service, in a new report said the Asia Pacific region’s performance may suffer in 2014 due to weak demand from the United States, and China’s intentional growth slowdown.

“Monthly trade data from Korea, Taiwan and China provide an early regional barometer—China as a source of demand and Korea and Taiwan as a gauge of global manufacturing,” Moody’s Analytics senior economist Glenn Levine said.

“Combining January and February figures to remove Lunar New Year distortions, it is becoming clearer that Gross Domestic Product (GDP) growth in the first quarter will be weaker than in the final three months of 2013,” he said.

Moody’s said China, the world’s second largest economy and the region’s main demand driver, may miss its goal of a growth of 7.5 percent this year.

The Philippine economy, for its part, is seen growing by 5.8 percent this year.

Although this is better than the previous 5.4-percent forecast, the projection is still slower than the 7.2-percent expansion in 2013.

Levine said the Philippine economy’s projected growth would also be lower than the country’s “potential” of 6.5 percent.

He said the firm doubted the government’s ability to sustain investment spending, which rose by an “astronomical” 15 percent in 2013. “We wouldn’t expect to continue at that pace indefinitely,” he said.

The firm’s forecast is slower than the government’s growth target of 6.5 to 7.5 percent for this year.

Levine also noted that the effects of Typhoon “Yolanda” were not as significant as expected.

Shortly after the typhoon hit Visayas last November, the government projected that fourth quarter growth would slow down to 4.1 percent.

Actual fourth-quarter growth was clocked in at 6.5 percent, beating most expectations.

The projected cost of reconstruction in provinces affected by the typhoon had also gone down significantly.

The government earlier said it would end up spending about P361 billion for the rehabilitation of damaged infrastructure in typhoon-hit areas.

Earlier this week, the government said the expected cost of reconstruction had gone down to about P106 billion.