Yolanda won’t derail Phl growth – Moody’s

MANILA, Philippines - The recent devastation brought about by Super Typhoon Yolanda is unlikely to derail the Philippines’ long-term economic growth, Moody’s Investors Service said.

“Although the tragic loss of life and the widespread disruption and damage to infrastructure will temporarily weigh on economic activity in the affected areas, we do not expect it to deraillong-term growth in the Philippines,” Christian de Guzman, senior analyst at Moody’s, said in a research note.

“Nor do we expect it to undermine ongoing improvements in the sovereign’s credit quality, such as higher-trend growth and fiscal and debt consolidation,” he added.

Moody’s last month gave the country its third investment grade rating.

The Philippines has been awarded a Baa3 rating with a positive outlook, which means further upgrade may be in the horizon in the next 12 to 18 months.

De Guzman said that Typhoon Yolanda is the most recent natural disaster that may potentially affect the country’s credit quality.

“Despite the scale of devastation in areas such as Tacloban City in the province of Leyte, the government preliminarily forecast a potential drag on 2013 real GDP (gross domestic product) growth of only 0.5 to one percentage point; we currently forecast full-year growth of seven percent, following a 7.6 percent increase in real GDP in the first half,” de Guzman said.

He explained that this highlights the relatively small contribution of the ravaged region to the whole country’s economic output.

De Guzman further noted that the biggest contributors to GDP - the National Capital Region and the Region IVA that together made up 53 percent of last year’s economic output- - were unaffected by Yolanda.