Global financial institutions are not a bit worried over the Philippine economy despite the coronavirus outbreak and other external headwinds. On the contrary, they are upbeat on the country's growth prospects given the strong macroeconomic fundamentals in place.
The International Monetary Fund has kept its 6.3-percent growth projection for the Philippine economy in 2020, noting the strong performance of the gross domestic product in the fourth quarter of 2019 and a manageable inflation rate. The institution has endorsed government's accelerated spending program to boost economic growth and its accommodative monetary policies, or lower interest rates, to reduce the borrowing cost.
Global debt watcher Fitch Ratings shares a similar assessment on the Philippine economy. It upgraded the credit rating outlook of the Philippines to “BBB” positive from “BBB” stable, stressing the country’s solid macroeconomic fundamentals could weather external headwinds, including the outbreak of 2019-novel coronavirus. The improved outlook puts the Philippines closer to the coveted “A” credit rating that will draw more foreign investments and reduce further the cost of borrowing in the country.
Fitch expects economic growth to accelerate to 6.4 percent and 6.5 percent in 2020 and 2021, respectively, after slowing to 5.9 percent in 2019, adding the Philippines would remain among the fastest-growing economies in the Asia-Pacific region in 2020-2021.
Fitch does not believe the virus outbreak will make a dent on the Philippine economy. “It is still early to evaluate the effects of the outbreak, but the economy appears somewhat less vulnerable than regional peers as tourism accounts for less than 3 percent of GDP. In addition, the Philippines retains room in our view for monetary and fiscal easing to offset the potential short-term impact on growth,” it said.
Japan-based Rating and Investment Information Inc., meanwhile, upgraded the Philippines’ credit rating by a notch from “BBB” to “BBB+.” The National Economic and Development Authority said the upgrade would enhance the country’s investment climate and creditworthiness.
The stamp of approval obtained by the Philippines from these three venerable institutions reflects the sound economic policies being implemented by the government. President Rodrigo Duterte has let his team run the economic affairs of the Philippines with little or no political interference. He should keep it that way and ignore shortsighted solutions that will do more harm to the economy.