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S&P: Philippines to remain an outperformer in Asia

S&P: PHL to remain an outperformer in Asia
By Joann Santiago

MANILA (Philippines News Agency) — Standard and Poor’s (S&P) continues to see the Philippines outperforming other Southeast Asian economies despite risks from the administration of US president-elect Donald Trump, among others.

In its latest credit outlook report, the debt rater maintained its six percent to 6.9 percent growth outlook for the Philippine economy this 2016.

The 2017 outlook is a range of 5.6 percent to 6.7 percent and the 2018 projection is between 5.7 percent to 6.7 percent.

“The Southeast Asian economies are seeing stable growth with the Philippines outperforming the region, given its growing middle class, a business process outsourcing boom,and expansionary fiscal policy with emphasis on public infrastructure,” the report said.

In the third quarter this year, the domestic economy posted the highest output for the period in the region at 7.1 percent.

This growth, as measured by gross domestic product (GDP), brought the average growth in the first three quarters of the year to seven percent, the upper end of the government’s six to seven percent target for this year.

In general, the credit rater said growth in the Asia Pacific is steadying amid recent volatilities in the financial markets caused by concerns on uncertainties of policies of the incoming Trump administration.

“Rising US stock markets, a sell-off in global debt markets, and the significant strengthening of the US dollar show that markets are already testing a scenario that incorporates key features of the President-elect’s campaign: fiscal stimulus through increased infrastructure spending and tax cuts; rising inflation; and a tightening monetary policy,” it said.

The last two factors may result to higher interest rates, it added.

S&P projects the Bangko Sentral ng Pilipinas (BSP) key policy rate to end 2016 at three percent and at 3.75 percent until end-2018.

To date, the central bank’s overnight borrowing or reverse repurchase (RRP) rate is three percent.

Baseline forecast for inflation is at 1.6 this year, three percent in 2017 and 3.6 percent in 2018.

As of last October, average inflation rate in the country stood at 1.6 percent, below the government’s two to four percent target range for 2015-18. (PNA)

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