MANILA, Philippines - Standard & Poor’s Financial Services (S&P) said the Philippines will continue to reflect strong growth in 2014 compared to the rest of the countries in the Association of Southeast Asian Nations (Asean).
In a report, S&P said while Asean member nations are expected to exhibit steady growth moving towards 2014, the Philippines would once again post the strongest growth in the region.
Rising household indebtedness has weighed on consumption in Thailand and Malaysia, while Indonesia is facing tighter monetary settings that were put in place to rein in the current account deficit.
“Of this group, only the Philippines looks like growth will continue at a high pace, particularly as rebuilding efforts begin after the disastrous typhoon that hit the country,†the report said.
S&P’s baseline outlook for Philippine gross domestic product (GDP) growth rate remains at seven percent, but would likely taper to 6.4 percent in 2014 and at six percent in 2015.
Assuming negative external conditions and weak reconstruction efforts for the devastation of the super typhoon and earthquake, next year’s growth could slow down to 5.7 percent and 5.4 percent in 2015, S&P added.
But if the economy can weather external pressures and swiftly take advantage of opportunities in the rebuilding phase, a seven-percent growth rate in 2014 is possible and 6.8 percent the following year, it pointed out.
Inflation will remain well under control across most of the region as slower growth and existing output gaps result in little demand-side price pressure.
“The notable exceptions are India and Indonesia, which have not only seen fuel subsidy cuts, but have also experienced extremely sharp depreciation of their currencies,†it reported.
S&P forecasts that inflation in the Philippines will remain relatively benign at 3.8 percent in 2014 and 3.4 percent the following year, remaining well within the range assumed by the Bangko Sentral ng Pilipinas (BSP) of three to five percent.
The BSP is likewise expected to keep policy rates at bay, or from three percent this year to 3.5 percent next year, and 3.75 percent in 2015.
“On the monetary policy front, we see very little impulse to move interest rates in either direction over the next year, with rates already very accommodative and inflation largely benign,†it said.