S&P hikes Phl growth outlook

MANILA, Philippines - Standard & Poor’s Ratings Services (S&P) raised its growth forecast for the Philippines, noting of an improving economic picture in developed markets that bodes well for the rest of the Asia-Pacific region.

Philippine economic growth could hit 5.9 percent this year before slightly slowing down to 5.7 percent in 2014, S&P said in a report released yesterday. The outlooks were up from the original forecasts of five percent and 4.8 percent, respectively.

The debt watcher also provided its 2015 forecast for the first time. By that year, the local economy may expand 5.4 percent. The economy grew by 6.6 percent last year.

“The drivers continue to be consumption, investment and government spending as well…The government’s commitment to good governance and anti-corruption efforts also contribute,” S&P credit analyst Andrew Palmer told The STAR in a phone interview.

The revised figures, although an improvement from September, still fell below the Aquino administration’s targets: six to seven-percent for 2013, 6.5 to 7.5-percent for 2014 and seven to eight-percent for 2015.

The Philippines, nonetheless, will continue to stand out among its peers in the Asia-Pacific, which is collectively projected to grow five percent this year from 4.7 percent in 2012.

In the report, the credit rater said the region is expected to post a steady growth or a little stronger this year as situation in debt-ridden developed markets “improved mildly.” Inflationary pressures have also eased.

Risks however persist, S&P said, noting among others, the potential impact of US budget cuts and the question of whether the eurozone nations will be able to recover from the debt crisis. US and Europe remain top export markets for most Asia-Pacific countries.

In the Philippines, S&P analyst Ivan Tan said robust growth have provided credit “room to grow” in the economy without “clear and present risks.”

However, bank regulators need to be vigilant as the local banking system is “not used to such high growth” which could later on backfire in the form of bubbles. Bank loans grew 15.4 percent in January, central bank data showed.