Moody’s: Economy grew by only 5.7% in 2015

The research arm of Moody’s Corp. projected the Philippine economy to have grown by 5.7 percent in 2015, below the government’s target.

Moody’s Analytics pointed out in a report Friday that such economic expansion would still make the Philippines “one of Asia’s fastest-growing economies last year.”

“The government has made successful strides in addressing corruption and encouraging foreign investment to bring about strong economic growth,” it noted.

The gross domestic product (GDP) would have expanded by 5.9 percent in the fourth quarter of 2015, Moody’s Analytics said.

The fourth-quarter GDP growth should have hit 6.9 percent to lift the full-year figure to at least 6 percent, which economic managers had said was more “realistic” than the official government target of 7-8 percent.

During the first three quarters of last year, the GDP growth averaged only 5.6 percent on the back of slower government spending on public goods and services as well as declining export sales.

But Moody’s Analytics said the “strong growth in services, including business process outsourcing (BPO), is helping offset weakness in exports from sluggish global demand and agriculture from drought in some parts.”

The BPO sector likely surpassed its $21-billion revenue goal last year. Executives expect the sector to grow further to hit $25 billion in revenues while employing a total 1.3 million by yearend.

As for merchandise exports, the value of shipments slid for the eighth-straight month last November, bringing the 11-month total down by 5.8 percent to $53.988 billion. The government had already conceded that 2015 was particularly challenging for the exports sector amid weak global demand.

Multilateral lender International Monetary Fund (IMF) earlier this week cut its GDP growth estimate for the Philippines for 2015 as well as its forecast for this year amid external risks posing challenges to domestic fundamentals.

In its World Economic Outlook released last Tuesday, the IMF said it expected the Philippine economy to have grown by 5.7 percent in 2015, below the previous estimate of 6 percent, “reflecting growth outturns to the third quarter and weaker global growth performance.”

For this year, the IMF’s growth outlook for the Philippines was lowered to 6.2 percent from 6.3 percent previously “to reflect the more challenging external environment,” IMF resident representative Shanaka Jayanath Peiris had said.

Despite the slight cut in the forecast for 2016, Peiris had noted that “the Philippines’ growth outlook remains one of the strongest in the region.”