Moody’s Analytics, a unit of Moody’s Corp., believes the Philippines emerged as one of the fastest growing economies in Asia despite the slowdown in the fourth quarter of last year.
In its latest Asia Pacific economic preview, Moody’s Analytics said the Philippine economy likely grew by 5.9 percent in the fourth quarter, lower than the six percent in the third quarter.
The economy grew six percent in the third quarter from the revised 5.8 percent in the second quarter of last year on the back of strong domestic demand and better government spending.
This brought the GDP growth to 5.6 percent in the first three quarters of last year, way below the seven percent to eight percent target penned by economic managers.
“This brings full-year GDP growth to 5.7 percent in 2015, making the Philippines one of Asia’s fastest-growing economies last year,” Moody’s Analytics added.
The unit of Moody’s engaged in economic research and analysis said the strong growth in services including business process outsourcing is helping offset weakness in exports from sluggish global demand and agriculture from drought in some parts.
Moody’s Investors Service has slashed its GDP growth projection of the Philippines to 5.7 percent instead of 6.7 percent for 2015 and to six percent instead of 6.5 percent for 2016 due to slow export growth, fiscal underspending, and the impact of El Niño on agricultural production.
Early this week, multilateral lender International Monetary Fund (IMF) slashed its growth target for the Philippines to 5.7 percent instead of six percent for 2015 and to 6.2 percent instead of 6.3 percent for 2016.
IMF resident representative Shanaka Jayanath Peiris said the growth estimate for 2015 was revised down to 5.7 percent from six percent, reflecting growth outturns to the third quarter and weaker global growth performance.
“Despite the weaker global economic outlook, the Philippines growth forecast for 2016 was only marginally lowered from 6.3 to 6.2 percent to reflect the more challenging external environment. The growth projection for 2017 remains unchanged from the October WEO at 6.5 percent,” he said.
Peiris added this year’s growth would be fuelled by strong domestic demand, recovering exports, and improving government spending with the launch of more public private partnership (PPP) projects.
He explained the medium term economic outlook for the Philippines was based on an assumption of continued prudent macroeconomic policies and greater investments in infrastructure and human capital to benefit from the demographic dividend, supported by the low levels of public and private debt.
Peiris said the risks to the global outlook remain tilted to the downside and relate to ongoing adjustments in the global economy: a generalized slowdown in emerging market economies, China’s rebalancing, lower commodity prices, and the gradual exit from extraordinarily accommodative monetary conditions in the US.