MANILA, Philippines – Despite a slower growth forecast of 5.9% in the last quarter of 2015, the Philippines still emerged as one of the fastest growing economies in Asia, a unit of Moody’s Corporation said.
Moody’s Analytics said in its latest Asia Pacific economic preview that the gross domestic product (GDP) growth of the Philippines eased to 5.9% in the 4th quarter from 6% in the 3rd quarter of last year.
The country’s GDP expansion accelerated to 6% in the third quarter from the revised 5.8% in the second quarter of last year, on the back of strong domestic demand and improving government spending. (READ: PH to miss 2015 GDP growth target – economists)
This brought GDP growth to 5.6% in the first 3 quarters of last year – way below the 7% to 8% target penned by economic managers – due to weak global demand and lack of government spending.
"This brings full-year GDP growth to 5.7% in 2015, making the Philippines one of Asia's fastest-growing economies last year," Moody's Analytics said.
Services sector still strong
The unit of Moody’s engaged in economic research and analysis said the strong growth in services, including business process outsourcing, is helping offset weakness in exports from sluggish global demand, and in agriculture.
It added the government has made successful strides in addressing corruption and encouraging foreign investments to bring about strong economic growth.
In September last year, Moody’s Investors Service slashed the GDP growth projection of the Philippines to 5.7% instead of 6.7% for 2015.
It also cut growth projection in 2016 to 6% instead of 6.5% for 2016, due to slowing export growth, fiscal underspending, and the impact of the El Niño-related dry spell on agricultural production.
Growth projection slashed
Early this week, multilateral lender International Monetary Fund (IMF) slashed the GDP growth of the Philippines to 5.7% instead of 6% for 2015, and to 6.2% instead of 6.3% for 2016, amid the slowdown in China and the normalization of interest rates in the US.
IMF resident representative Shanaka Jayanath Peiris said the growth estimate for 2015 was revised to 5.7%, reflecting growth outturns in the third quarter and weaker global growth performance.
"Despite the weaker global economic outlook, the Philippines growth forecast for 2016 was only marginally lowered from 6.3% to 6.2% to reflect the more challenging external environment. The growth projection for 2017 remains unchanged from the October WEO at 6.5%," Peiris said.
He added this year’s growth would be fueled by strong domestic demand, recovering exports, and improving government spending, with the launch of more public private partnership (PPP) projects.
He explained the medium-term economic outlook for the Philippines was based on an assumption of continued prudent macroeconomic policies and greater investments in infrastructure and human capital.
Peiris said the risks to the global outlook remained tilted to the downside and relate to ongoing adjustments in the global economy: a generalized slowdown in emerging market economies, China’s rebalancing, lower commodity prices, and the gradual exit from extraordinarily accomodative monetary conditions in the US. – Rappler.com