Moody’s Investors Service said it expects the Philippine economy to grow 5.8 percent this year, one of the fastest in Southeast Asia.
Moody’s said in a regional growth update report for the month of August that the Philippines would most likely grow faster than 0.5 percent of Singapore, 4.4 percent of Malaysia, 2.7 percent of Thailand and 4.9 percent of Indonesia. Vietnam is seen to grow the fastest in Southeast Asia at 6.7 percent.
The global debt watcher said the Philippine economy would grow faster at 6.2 percent in 2020, outpacing 4.3 percent of Malaysia, 3.1 percent of Thailand, 1.2 percent of Singapore and 4.7 percent of Indonesia.
The Philippines is also seen to grow faster than China’s 5.8 percent next year.
Moody’s earlier announced the reduction of GDP forecast for the Philippines this year to 5.8 percent from the previous estimate of 6 percent.
Moody’s said the weak output in the first half and the deteriorating outlook for trade dragged lower the growth forecasts across Asia.
“Externally-oriented economies have experienced a sharper slowing in the first half of 2019. Domestic factors have had a greater influence in India, Japan [consumption tax hike] and the Philippines [budget delay],” it said.
Moody’s expects the slowest rates of growth since the global financial crises for Hong Kong, Singapore and Korea.
It said that for the Philippines, “the delay in the passing of the government budget has disrupted its infrastructure building plans.”
Moody’s said the stable consumption and policy accommodation would mitigate further weakening of economies in the region.
“Stable outlook for oil prices contribute to benign inflation, which has supported rate cuts... Bangko Sentral ng Pilipinas has started to unwind the tightening precipitated by a spike in food inflation in 2018, while employing reserve requirements to more actively manage systemic liquidity,” it said.
The policy-making Monetary Board of the Bangko Sentral ng Pilipinas cut the benchmark interest rate by 25 basis points to 4.25 percent on Aug. 8.
Inflation averaged at 3.3 percent in the first seven months, slower than the 6.7-percent peak in October 2018. The average was within the target range of 2 percent to 4 percent for 2019.
Monetary officials remained optimistic that a strong recovery could be expected in the second half as the government ramps up fiscal spending.