Although elsewhere the prospect for high growth this year was seen ranging no more than 5 percent in terms of gross domestic product (GDP), the sovereign-credit watcher Moody’s Investor Service anticipates accelerating local output as high as 7 percent.
Moody’s Analytics, a subsidiary of the New York-based credit watcher, said Manila’s actual growth performance in 2012 averaging 6.6 percent would prove even stronger this time around.
Moody’s Analytics Senior Economist Glenn Levine said while last year’s growth reflected output at potential, 2013 looks set for a “strong” outcome.
“The Philippines has been among the brightest parts of a generally gloomy global picture. Even with China’s
economy slowing, the US struggling to gain traction and Europe stuck in a long-running crisis, the Philippines economy has continued to drive forward, registering 6.6-percent GDP growth in 2012. The stock market has surged 23 percent this year after a 33-percent rise in 2012. Investors are bullish on the Philippines, and so are we,” the Moody’s subsidiary said.
Moody’s was impressed enough to say the country’s macroeconomic performance last year looks sustainable.
It noted that risks to Philippine inflation, such as the volatile price of world oil and potentially disorderly unwinding of foreign inflows, have been managed so well by the monetary authorities represented in this case by the Bangko Sentral ng Pilipinas.
According to Levine, the risks to inflation are low and that most economic sectors “are growing solidly.”
He noted construction surged 14 percent in 2012, while most other industries recorded solid but sustainable growth.
“This should continue in 2013, led by construction and business-process outsourcing, which account for a sizable chunk of the Philippines’s exports as less competitive industries such as electronics have receded. On the demand side, government spending was strong in 2012, although this accounts for less than 10 percent of GDP. All of the other demand components recorded robust growth,” Levine said.
He added the strong growth took place in an environment of falling domestic risk and low inflation.
“Inflation has stabilized near 3 percent per year, comfortably at the lower end of the central bank’s targeted 3-percent to 5-percent range, allowing the overnight interest rate to be cut to 3.5 percent. This all suggests that the current rate of growth is sustainable,” Levine said.
As a result, the Moody’s subsidiary said it anticipates GDP growth to remain in the 6.5-percent to 7-percent range for the Philippines in 2013 and 2014, making the country one of the world’s fastest-growing economies. –Jun Vallecera / Reporter, Businessmirror, with reports from PNA
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