Fitch expects slower PH growth in 2013

MANILA, Philippines – Despite bestowing the country’s first investment grade rating, international credit rating firm Fitch Ratings expects the growth of the Philippine economy to slow down in 2013.

In its statement on Wednesday, March 27, Fitch said it expects the Philippine economy to grow between 5% to 5.5% in 2013.

This is lower than the full year growth of 6.6% in 2012 and the 6% to 7% target of the national government in 2013. 

“Fitch expects GDP growth of 5.5% in 2013,” the international credit rating firm said without expounding.

It noted, however, that “the Philippine economy has been resilient, expanding 6.6% in 2012 amid a weak global economic backdrop. Strong domestic demand drove this outturn.  

“The Philippines has experienced stronger and less volatile growth than its ‘BBB’ peers over the past 5 years,” the ratings firm added.

Fitch also said it does not expect any “severe economic or financial shock” to negatively impact the Philippine’s Gross Domestic Product (GDP) growth or jeopardize its relatively strong financial position. 

It does not see any “severe risks” on the horizon “that could impact emerging market economies, such as a breakup of the Eurozone, or a severe economic crisis in China.”

“The ratings incorporate an assumption that the Philippines is not hit by a severe economic or financial shock sufficient to cause a significant contraction in GDP and trigger stress in the financial system,” Fitch said. 

Socioeconomic Planning Secretary Arsenio Balisacan said the country likely posted economic growth of 6% to 7% in the first quarter of 2013, in line with target, as strong remittances and election spending offset weak exports.

The statement of Fitch on the country’s ratings upgrade was well received by many Filipinos, most notably the Philippine Stock Exchange Index which soared to its 24th high on Wednesday. The market closed at 6,847.47 points after peaking at 6,872.14 points. – with reports from Cai Ordinario/Rappler.com