Philippine economic growth is expected to remain strong but risks to this outlook are rising, Moody’s Investors Service said.
“We project real GDP (gross domestic product) growth to be stable for the remainder of 2017 and to average 6.5 percent for the whole year, although at the lower end of the government’s forecast range of 6.5 percent to 7.5 percent,” the debt watcher said in a report on Friday.
Moody’s full-year forecast represents a slowdown from 2016’s actual GDP growth of 6.9 percent.
The Philippine economy grew by 6.5 percent in the second quarter, picking up from the 6.4 percent recorded in the first three months of the year but down from the 7.1 percent posted a year earlier.
Year to date growth, at 6.4 percent, remains below target.
“We expect robust economic growth to be sustained over the next few years, aided by the government’s focus on infrastructure development, buoyant private sector investment, and the recovery in external demand,” Moody’s said.
However, the debt watcher pointed out that the re-emergence of war in the southern Philippines, as well as the Duterte administration’s focus on the eradication of illegal drugs, “represents a rising but unlikely risk of a deterioration in economic performance and institutional strength.”
Moody’s said political analysts and government critics were concerned over an expansion of martial law in Mindanao.
“An unchecked expansion of the President’s authority could weaken constitutional checks and balances, and undermine the buoyant private sector sentiment that has underpinned the Philippines’s robust economic performance,” it said.
Moreover, Moody’s said that while it expected a continuation of strong economic and fiscal governance, a prolonged focus on political matters could draw attention away from the government’s reform agenda, particularly economic and fiscal changes such asComprehensive Tax Reform Program.