by: Sarah Joson
Monday, June 8, 2015 |
Credit rating agency Moody’s Investors Service revealed that it is planning to revise growth outlook for the Philippines for 2015 due to the slow first quarter.
In a statement sent to BusinessWorld, Christian de Guzman, Moody’s Senior Sovereign Risk Analyst, said they will be releasing a revised growth projection by the end of the month.
Moody’s predicts a 6.5% increase in GDP this year and 6.0% in 2016, which are lower than the 7-8% growth target set by the government for both periods. This year’s first quarter posted a 5.2% growth - the slowest in over three years. Below par state spending and flagging exports were also seen during this period.
The 7-8% growth target may be difficult to achieve this year, said Mr. de Guzman, as there is no significant growth in public spending, and external demands are low. But, he noted that even with the slow growth in the first quarter, it is expected to be balanced out by sustained demand from the private sector, particularly the household consumption and business investment. He also pointed out that growth is rosy compared to similarly rated countries, and external balances, fiscal deficits, and funding conditions for the government remain aligned with the Baa2 rating with stable outlook.
Last December, Moody’s upgraded the country’s long-term foreign currency issuer rating to Baa2, with a “stable” outlook, from the Baa3 rating it issued in October 2013.
Even if it is the highest the country has received to date, it is only one spot higher than the lowest investment grade.
Standard & Poor’s likewise gave a rating which is one spot above the minimum at BBB last April.
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