Moody’s cuts PH growth forecast


For 2015 – down to 5.7% from 6%

Moody’s Investors Service adjusted downward its growth forecast for the Philippine economy this year to 5.7 percent from its previous projection of 6.0 percent, citing slow exports, government underspending and the impact of El Niño on agriculture.

The credit watcher also sees the overall export outlook on Asia Pacific weakening on the back of a slowdown in China.

Moody’s revised forecast for gross domestic product (GDP) for full-year 2015 is also below the 6.1 percent expansion achieved last year and the 7 percent to 8 percent growth assumption by the government for this year.

GDP in the first quarter fell below expectations both by private economists and the government, which had to revise the figure down from a previously reported 5.2 percent to 5.0 percent.

In a report, Moody’s said weak demand from China has dampened the overall export outlook for the Asia Pacific region, which includes the Philippines.

The latest data from the Philippines Statistics Authority (PSA) has shown a 4.7 percent decline in cumulative merchandise exports in the first half of this year to $28.804 billion from $30.233 billion in the year-earlier period.

Repeated misses
Fiscal underspending continued to be an issue in the Philippines, Moody’s said, noting that the government has repeatedly missed its targets.

As of end-July, government spending stood at P1.282 trillion, or 11 percent higher than the year-ago level. However, disbursements for the seven months fell short by 15 percent from the P1.517 billion target for the period, according to data from the Department of Finance.

“Slowing export growth and fiscal underspending weighed on output in the first half of the year in the Philippines,” Moody’s said.

It pointed out that economic growth in the first half lost steam to 5.3 percent from 6.2 percent a year earlier.

Moody’s said it expects fiscal disbursements to accelerate in the second half, and to see further progress on infrastructure development related to the government’s public-private partnership program.

“On the supply side, the El Niño-related dry spell hurt agricultural production, contributing to our lower GDP growth forecast of 5.7 percent for 2015,” it said.

Earlier, the International Monetary Fund (IMF) warned it would revise downward its growth outlook of 6.2 percent for the country to reflect the government’s own downward adjustment on the first-quarter GDP performance.

Five of the seven analysts who had commented on the second quarter GDP figures also released reduced forecast figures for 2015, citing weak exports and uneven global growth as risks.

Analysts from the Bank of the Philippine Islands, Metropolitan Bank and Trust Co. (Metrobank) Research, Singaporean bank DBS, London-based research consultancy firm Capital Economics, and United Kingdom-based investment bank Barclays now expect the year’s GDP growth in the range of 5.5 percent to 6.2 percent.

Meanwhile, analysts from Fitch Group’s think tank BMI Research and Standard Chartered Bank had chosen to keep their 2015 GDP outlook unchanged at 6 percent and 5.7 percent, respectively.


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