S&P: Philippine lure to weather Duterte talk

CONTROVERSIAL statements made by President Rodrigo R. Duterte are unlikely to spoil the Philippines’ growth story, according to a credit analyst at S&P Global Ratings who noted that such remarks have yet to translate to actual policy changes.

“As far as we can see, despite quite a number of potentially controversial pronouncements by the new leadership in the Philippines, we haven’t actually seen any major change in external relations in a real way,” S&P senior director for sovereign ratings Kim Eng Tan said in an online media briefing yesterday.

“Also, we have noted that this government has not actually voiced any intentions to change the macroeconomic policy that’s been tradition in the Philippines in the past one to two decades,” Mr. Tan added.

“Therefore, we continue to see a relatively stable macroeconomic policy environment for the economy.”

The Philippines currently holds a “BBB” rating with a “stable” outlook from S&P — a status last upheld in September last year.

In a report last week, the debt watcher said a rating upgrade is unlikely for the Philippines over the next two years.

His first six months in office saw Mr. Duterte cursing United States President Barack H. Obama, the European Union, the United Nations and anyone else who voiced concern over his ruthless war on narcotics that has been blamed for thousands of deaths — including a number of innocents now tagged as “collateral” casualties.

His Oct. 20 speech during a visit to Beijing — wherein he announced “separation” from the United States in military and even economic terms and realignment with China and Russia — signaled a widely noticed foreign policy recalibration to develop multifaceted relations with those two powers that have challenged US influence.

Cabinet officials have since taken pains to explain that Mr. Duterte’s “pivot” was a mere effort to develop balanced relations with all powers — especially with Asian neighbors — without cutting decades-old ties with the US.

Mr. Duterte has since grown friendly with US President-elect Donald J. Trump — who takes office this Jan. 20 — saying he was prepared to build relations with the new American leader.

Other analysts have flagged Mr. Duterte’s expletive- laden remarks as a source of concern, warning that the unpredictability they signaled could turn off potential foreign investors planning to set up shop in the Philippines.

But for Mr. Tan, the President’s harsh rhetoric remains all talk for now.

“We continue to see relatively healthy sovereign credit metrics supporting the ‘ BBB’ rating for the Philippines. Growth continues to be relatively strong, especially compared to its neighbors. External accounts are relatively strong as well,” the S& P credit analyst noted, saying that steady cash remittances should help prop up the economy despite a slowdown in external trade.

S&P expects growth at 6.6% in 2016 and 6.4% this year, higher than its previous forecasts and signaling that an above- 6% annual expansion may be sustained until 2019.

At the same time, the credit rater said it remains “watchful” of the President’s public speeches: “If these statements do translate to real changes in foreign policy that could potentially have negative implications for investments into the country, then we will have to assess the likely impact they may have on external economic support for the ratings.”

So far, Mr. Tan said Mr. Duterte’s pivot to China is seen positive for the short term, as Beijing can serve as a fresh source of foreign borrowings to fund local government projects. China also offers a big market for Philippine goods that have otherwise reeled from muted demand in the West.

Mr. Duterte’s four- day state visit to China in October bagged at least $13 billion worth of trade deals. —