S&P raises 2017 growth forecast for PH in 2017, 2018

Debt-watcher Standard and Poor’s (S&P) raised its economic growth forecast for the Philippines, but signalled the Duterte administration is unlikely to win any credit rating upgrade in the next two years.

In its latest regional sovereign report, S&P Global Ratings said the country’s economy, as measured by its gross domestic product (GDP), may grow by 6.4 percent this year, faster than its earlier projection of 6.3 percent.

But despite the upgrade, S&P’s latest forecast for the year is below the government’s target of 6.5 percent to 7.5 percent.

S&P also expects the GDP to ease next year to 6.2 percent before slightly growing at a much faster pace of 6.3 percent in 2019.

Still, S&P’s 2018 and 2019 GDP projections are below the 7.0 percent to 8.0 percent target range set by President Rodrigo R. Duterte’s economic managers for the two-year period.

Based on S&P’s rating assessment report, the debt-watcher saw some “weakness” in the country’s economy; “neutral” in budget performance, as well as monetary; and “strength” in external and debt burden.

Last September, S&P said the Philippines was unlikely to secure higher credit ratings due to uncertainties surrounding the stability, predictability, and accountability of the Duterte administration.

The S&P, one of three major international credit rating agencies, noted that the Philippine government’s stability and predictability in policymaking have “diminished” following Duterte’s controversial pronouncements.

“The stable outlook balances the Philippines’ lower middleincome economy and diminished policy stability, predictability, and accountability against its strong external position, which features rising foreign exchange reserves and low and declining external debt,” S&P said.

“A higher rating is unlikely over our two-year ratings horizon,” it added.

But S&P said they may raise the ratings if continued fiscal improvements under the Duterte administration boost investment and economic growth prospects.