Standard & Poor’s Ratings Services (S&P) is maintaining its 2015 growth forecast for the Philippines at 5.6 percent, with the economy viewed as the strongest performer among its regional peers.
A slight rise to 5.7 percent is expected for 2016, meanwhile, and the debt watcher warned that policy continuity could become an issue as the Aquino administration steps down next year.
Both forecasts fall below the government’s 7 percent to 8 percent target and are also lower than last year’s actual growth of 6.1 percent. As of September, gross domestic product (GDP) growth averaged 5.6 percent.
S&P described the Philippines as the strong performer in the Association of Southeast Asian Nations-4 grouping that includes Indonesia, Malaysia and Thailand.
“The Philippines remains the strong performer in this group, although there are concerns about policy continuity as President [Benigno] Aquino [3rd]’s term ends,” it said.
The Asean-4 would see growth hold up better than the region’s so-called “tiger” economies, S&P said, but it is still not immune to external developments.
The “tiger” economies that include Hong Kong, Singapore, South Korea and Taiwan will continue to be weighed down by slow trade growth, including onshoring of manufacturing by China.
“Growth in this group will continue to struggle. GDP growth in this group will reach just 2 percent with only a modest recovery in the next two years, with growth remaining below 3 percent,” S&P said.
For the whole Asia-Pacific region, S&P said it continued expect relatively sluggish growth of 5.3 percent for 2015 and 2016 and 5.2 percent for 2017.
“Moreover, we see a steadily narrowing gap between the developed markets and the emerging markets as the latter have tended to slow more quickly,” it said.
China will still lead Asia-Pacific growth next year and the region will continue to outperform the rest of the global economy, S&P said.
The region, however, will have to adapt to developments to ensure relatively strong, balanced, and sustainable growth, it noted.