Fitch Ratings has lifted its growth projection for the Philippines but lowered its estimates for the rest of emerging Asia.
In a special report, the credit ratings firm said in its September Global Economic Outlook that the country’s gross domestic product (GDP) is projected to grow by 6.2 percent this year.
The September outlook was higher compared to its 5.5-percent forecast in December last year, and within the 6-percent to 7-percent target range of the government for 2013.
Fitch said that the pick-up in investment spending and support from resilient remittance flows were the factors for its higher growth projection for the Philippines.
In the first half of 2013, the country grew 7.6 percent, the highest among the countries in Southeast Asia.
Meanwhile, data from the Bangko Sentral ng Pilipinas showed that personal remittances from overseas Filipino workers remained strong, as it reached $13.9 billion for the first seven months of the year.
On the other hand, Fitch revised down its growth projection for emerging Asian economies to 5.7 percent for 2013 and 5.8 percent in 2014, from 6.4 percent and 6.5 percent, respectively, at the December 2012 forecast round.
“Credible, coherent economic policy management by authorities in Emerging Asia will likely be the central factor in determining regional sovereign credit outlooks, as the economies face their
weakest growth prospects since 1998,” it stated.
The ratings firm also believes that the two main factors affecting the growth outlook for Emerging Asia were the tighter global monetary conditions as the US Federal Reserve tapers quantitative easing, and downward pressure on non-fuel commodity prices from China’s slowdown.
“The currency and asset-price volatility over summer 2013 point to the market’s continuing reassessment of Emerging Asia’s prospects,” it said.
Fitch also believes the main factors weighing on growth are likely to be long-lasting, implying a structural downshift in growth expectations.
However, the ratings firm does not see a repeat of the region’s 1997 to 1998 financial crisis as likely at this time, because of stronger regional sovereign credit profiles—in particular, external balance sheets.