MANILA, Philippines – The Philippines, already in the limelight as one of the fastest-growing economies in the world, gained another vote of confidence from two global financial institutions with a fresh round of economic upgrades.
In separate reports, the Asian Development Bank and Standard & Poor’s both revised upwards their 2013 growth forecasts for the Philippines, while cutting the outlook for the rest of the emerging economies in Asia.
Manila-based multilateral lender ADB hiked its gross domestic product (GDP) growth forecast to seven percent from an earlier six percent, citing strong domestic consumption, remittances and investments as main drivers of growth.
“The economy is riding on the back of hefty domestic demand and investment, low inflation and interest rates, buoyant remittance flows, and upbeat business sentiment,” ADB Philippines country director Neeraj Jain said yesterday.
“Our short and medium term outlook for the Philippines remains strong and optimistic,” added chief econcomist Norio Usui.
The ADB executive said the country’s fiscal balance has improved along with its external balance position, while its external debt remains manageable as government had been actively restructuring it.
“The Philippines has the strong capacity to ride out any storm,” Usui said.
Meanwhile, debt watcher S&P also revised its forecast for the Philippine economy upwards, although it warned risks to growth in the Asia Pacific region remain.
S&P raised its 2013 GDP outlook for the country to 7.1 percent from the 6.9 percent announced in July.
It said the country, along with other economies in Asia Pacific, have seen the highest growth in the world following the global financial crisis in 2008.
“Although Asia Pacific’s pace of expansion has declined over the past few years or so, the region’s growth continues to be the highest in the world after the global financial crisis,” S&P said.
However, it pointed out that exports, the main drivers of growth in a number of economies, have declined amid the slowing global economy.
“With ultra-low interest rates generated by major central banks, lending has surged in some Asian economies, providing–at least for now–an offset to weaker external demand. Add to this mix slower growth in the two Asian giants, China and India, and we believe the region is unlikely to return to pre-crisis growth even if the advanced economies–particularly the United States–recover smartly,” S&P warned.
The region’s growth is forecast to settle at 5.2 percent this year. –-Ted P. Torres and Kathleen A. Martin (The Philippine Star) with AP
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