The Philippines is now the leader in terms of growth among the major economies in the Association of Southeast Asian Nations (Asean), Standard & Poor’s (S&P) said in an economic research.
“The Philippines, which Standard & Poor’s recently upgraded to investment grade, has taken over the Asean growth leadership role from Indonesia,” it stated. S&P gave the country’s second investment grade rating in May from BB+ to BBB- and assigned a “stable” outlook on the country’s new rating.
In terms of gross domestic product (GDP), the country grew by 7.8 percent in the first half of the year, the highest recorded economic expansion in Asean.
This year, the ratings agency also projected the Philippine gross domestic product to expand by almost 7 percent this year.
For 2014 to 2015, it said that the country’s growth may moderate by 6 percent to 6.5 percent, respectively.
Inflation, on the other hand, was projected at 3.1 percent in 2013, or at the lower end of the 3-percent to 5-percent target of the Bangko Sentral ng Pilipinas.
Meanwhile, S&P said that the major Asean economies such Indonesia, Malaysia, Philippines, Thailand, and Vietnam continue to outperform other Asia Pacific countries.
“These economies are more domestically focused than the Newly Industrialized Economies [NIEs] and therefore tend to do better when global growth is sluggish,” it said, referring to Hong Kong, Korea, Singapore, and Taiwan.
In its baseline scenario, the ratings agency said that growth for Asean is expected to remain steady at about 5.5 percent this year until 2015.
It added that growth will be at 6.1 percent for Indonesia, 5.3 percent for Malaysia, 5.3 percent for Vietnam, and 3.9 percent for Thailand.
S&P said that Indonesia’s growth momentum remains strong, but financing the resulting current account deficit has become increasingly difficult.
“Malaysia is also relatively open, but strong private and public investments, including infrastructure spending, are supporting overall growth,” it said.
It added that Vietnam’s growth has fallen significantly below potential, as the economy struggles with the stock of nonperforming loans and slow credit growth, while Thailand lags as it is relatively more trade-dependent.
“The risks to growth within the Asean group are tilted modestly to the downside, but in a tighter range than the NIEs,” it stated.