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Fitch Says PH can Weather External Shocks

by: Sarah Joson

Tuesday, October 6, 2015 |

Credit rating agency Fitch Ratings said emerging economies of Vietnam, India, and the Philippines will be able to weather external shocks.

According to Fitch Asia-Pacific Sovereigns Head Andrew Colquhoun, these countries are less vulnerable to external volatilities which initially pushed the debt watcher to lower its global economic growth forecast to 2.3% for 2015.

Fitch Ratings recently released a report called “Emerging Market Vulnerability Weighing on Global Growth Outlook” which highlighted the factors affecting the global economic environment. These include US Federal Reserve’s interest rate hike, the slowdown of China’s economy, and slow recovery of Japan.

Fitch’s 2.3% growth forecast for this year is the lowest since 2009 due to several reasons such as pressures on emerging markets, ongoing structural changes in China, and recession in Brazil and Russia.

Moreover, emerging markets are transforming into sources of global growth risks driven by the downfall in commodity prices and continuous aggravation of a global slowdown caused by political challenges. Still, the effects will be major compared to larger, more advanced countries. On top of ASEAN economies, Australia will likely be exposed to the effects with a 1.8% point GDP impact by 2017.

Fitch noted that this is the result of direct trade connections and exposure to China, and the backward movement of policy options that are widely popular to developed nations with stable fundamentals.

A 2.7% GDP growth is seen in emerging markets in 2016 and 2017, whereas major advanced economies are expected to grow by 2% next year.


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