S&P raises PHL growth forecast to 6.5%

Standard & Poor’s Ratings Services (S&P) has raised its gross domestic product (GDP) growth forecast for the Philippines and two other Asia-Pacific economies for this year despite the region's losing some momentum in early 2013. In its latest report published on Tuesday, S&P raised the Philippines' base case 2013 growth forecast to 6.5 percent, as well as to Malaysia's (5.5 percent) and Taiwan's (3.8 percent), "reflecting the ongoing strength of those economies," while it trimmed or maintained outlooks for 11 other countries in the region. It added that the Philippines' GDP growth could expand 6.8 percent on the upside or 5.5 percent on the downside this year. For next year, the debt watcher forecasts a lower growth of 6.3 percent, with downside and upside estimates of 5.2 percent and 6.6 percent, respectively. It also noted that growth may slow to 6 percent in 2015, possibly hitting a low of 5 percent or accelerating to 6.3 percent. "Southeast Asia's relatively domestically driven economies, led by Indonesia, will perform well again, with growth of 5.6 percent in both 2013 and 2014," S&P said. On March 7, S&P pegged the Philippines' GDP growth scenario at 5.9 percent this year, 5.7 percent in 2014 and 5.4 percent in 2015. In 2012, the Philippine economy surpassed government expectations as it expanded 6.6 percent amid fiscal problems in the US and in Europe. Other Asia-Pacific economies S&P downgraded its forecast for China, Hong Kong, India, Japan, South Korea, Singapore, Thailand and Vietnam, and maintained its outlook for Australia, Indonesia and New Zealand. "Although Asia Pacific continues to record strong real GDP growth relative to other regions, activity indicators in early 2013 suggest that the rebound that began in the second half of 2012 has lost some traction," S&P said in the report. The debt watcher noted that growth and exports generally increased in the second half of 2012 as there were more positive global developments, especially in the U.S. "Export growth, which began to rebound late last year, has started to soften again. Many economies in the region continue to face single-digit or even negative export growth on a year-on-year basis," S&P said. Growth in most of the region will hold steady or pick up slightly in 2013 and 2014, driven by prospects for strengthening U.S. growth, reduced tail risks in the Eurozone, and supportive monetary policy. Meanwhile, top risks include deterioration in the U.S. recovery,  deepening of the economic recession in Europe, and any slowdown in China's economy. — Danessa O. Rivera/BM, GMA News