Moody’s Analytics ups PHL 2012 GDP growth to 4.7% from 4%

Moody’s Corporation’s unit Moody's Analytics Inc. upgraded the Philippines 2012 gross domestic product growth forecast to 4.7 percent from four percent after a stronger-than-expected economic expansion in the first quarter of the year.

 

In a study entitled “Philippines Outlook: Braving Global Headwinds,” Moody’s Analytics economist Katrina Ell said the upgrade could be attributed to the reforms being undertaken by the Aquino government that continue to attract foreign investment and boost growth prospects.

 

The National Statistical Coordination Board reported late last month that the country’s GDP growth zoomed to 6.4 percent in the first quarter of the year from the upwardly revised growth of 4.9 percent last year, because of benign inflation, a revitalized Services sector, and a recovering manufacturing sector.

 

The GDP growth of the Philippines, which Ell called “the strongest GDP growth in Southeast Asia and the second strongest in Asia behind China”, was faster than Indonesia’s 6.3 percent, Vietnam’s four percent, Singapore’s 1.6 percent, and Thailand’s 0.3 percent. China logged an 8.1 percent expansion in the first quarter of the year.

 

However, Ell explained, “We are more bearish than the government, which targets growth of five percent to six percent, as we are skeptical that the economy will maintain its blistering first quarter growth pace.”

 

According to her, “global headwinds” threaten the Philippine economy given its large reliance on exports and remittances from Filipinos working abroad.

 

Ell explained that the 5.4 percent growth in OFW remittances from January to March increased household consumption while exports improved a little amid weak global demand.

 

An upside, according the Analytics economist, is the Philippine government’s twin policy arms of lifting infrastructure and reducing corruption which should help shore up both domestic and foreign direct investment, lifting the economy's long term growth prospects.   

 

The Philippines has so far received six upgrades from Moody’s Investors Service since President Benigno Aquino III assumed power. 

 

London-based Fitch Ratings places the country’s sovereign debt at one notch below investment grade on a stable outlook while Moody’s Investors Service as well as Standard and Poor’s rate the country’s sovereign debt at two notches below investment grade on a positive outlook. —GMA News (June 06, 2012)