S&P cuts 2015, 2016 PH GDP forecast

MANILA, Philippines – Standard & Poor’s (S&P) slashed its 2015 and 2016 growth forecasts for the Philippines, amid the slowdown in China and the feared potential negative effects of the normalizing interests rates in the United States.

In its recent economic research report entitled “Asia Pacific could be entering a steady state of slower growth,” the credit rating agency lowered its gross domestic product (GDP) growth forecast for the Philippines to 6% this year and next year, from 6.2% and 6.4%, respectively.

For 2017, S&P sees the country’s domestic output as measured by the Philippines expanding by 6.1%.

“And even the Philippines, one of the star performers, has hit a soft patch,” S&P said in the report released late Wednesday, July 8.

Faster expansion

The country’s economic managers see GDP expanding between 7% and 8% this year.

The Philippines missed its 6.5% to 7.5% target in 2014, when domestic economy expanded only by 6.1% from 7.2% in 2013.

The country booked a 5.2% GDP growth in the first quarter of 2015 from 5.6% in the same quarter last year on the back of anemic spending caused by delays in the implementation of much-needed infrastructure projects.

Despite the lower growth forecast, the country’s economic growth would be faster than S&P’s forecast growth of 4.9% for 2015 and 5.1% for 2016 for the Association of Southeast Asian Nations (ASEAN-4) which includes the Philippines, Indonesia, Malaysia, and Thailand.

“Finally, the ASEAN-4 economies are also seeing subpar growth for a variety of reasons. Indonesia, the largest of this group, has seen growth slide closer to 5% from an average of about 6% in the post-financial crisis period. Growth in Thailand has recovered from the 2014 coup but remains subdued,” S&P added.

The international credit rating agency also sees GDP growth in the Asia-Pacific  slowing down to 5.5% this year from 5.6% in 2014, and expects growth in the region to improve to 5.6% in 2016 before slowing down again to 5.5% in 2017.

“As the US recovery gathers pace and China stabilizes around a lower growth trajectory, we are left with characterizing Asia-Pacific’s new steady state,” S&P said.

S&P said that  in assessing Asia-Pacific’s post-financial crisis steady state, two factors need to be monitored – the recovery in global trade and China’s growth prospects. – Rappler.com