S&P sees sustained growth until 2020
A major international credit rating agency said Tuesday it expects the Philippines to sustain an annual growth above 6 percent until 2020.
S&P Global Ratings said in a report titled ‘Asia-Pacific Economic Snapshots’ that the gross domestic product of the Philippines would likely grow 6.4 percent this year, after expanding 6.4 percent in the first six months.
The Philippine economy is projected to grow 6.4 percent in 2018, 6.6 percent in 2019 and 6.7 percent in 2020, according to S&P.
“We expect strong domestic demand to drive solid GDP expansion over the next few years, at about 6.5 percent annually,” S&P Global said.
S&P said external factors would continue to be the main source of risks―such as rising protectionism overseas, geopolitical tensions or uncertainty in financial markets that could lead to capital outflows.
“The tail risk of a spillover of tension and fighting in the south [between government forces and extremists] appears to have receded significantly,” it said.
Standard Chartered Bank said in a separate report the Philippines would be the fastest-growing Asean-6 economy in 2017, with a 6.5-percent expansion.
“Strong domestic demand and steady services-sector growth will likely remain the primary growth drivers; better implementation of planned infrastructure investments might drive even faster growth,” Standard Chartered said.
The government targets a GDP growth of between 6.5 percent and 7.5 percent this year, and 7 percent and 8 percent in 2018 to 2022.
S&P also projected that inflation would remain benign, but “we maintain the view that consistently strong growth will likely lead to a shift in bias toward tightening by the Bangko Sentral in first half of 2017.”
Standard Chartered said it expected inflation to average 3.1 percent in 2017 and 3.2 percent in 2018, on higher oil prices and the government’s tax reform plan.
“The central bank, however, is likely to look through this increase in headline inflation. We expect BSP to keep the policy rate on hold throughout 2017 and 2018,” Standard Chartered said.