Debt watcher Standard & Poor’s Ratings Services (S&P) raised its growth forecast for the Philippines for this year and next, stressing that the economy will continue to be a bright spot in Southeast Asia amid risks mostly centered on China.
In a report released on Tuesday, S&P said Philippine gross domestic product (GDP) in 2016 could expand to 6 percent before accelerating to 6.3 percent in 2017.
The credit rater’s previous projections were 5.7-percent and 5.9-percent growth for 2016 and the following year, respectively.
The S&P’s forecasts were lower than the government’s 6.8-percent to 7.8-percent target for 2016 as well as the 6.6 percent to 7.6 percent range set for 2017, but higher than the GDP growth of 5.8 percent last year.
“The Philippines has been a bright spot, with strong growth driven by consumption and business process outsourcing, although there is some political transition risk as well due to this year’s elections,” the credit ratings agency stated.
S&P said while its macroeconomic forecasts for the rest of the Asia Pacific are largely unchanged, it continues to see the balance of risks as being on the downside, and mostly centered on China.
“The lag effects from China’s economic slowdown and weak commodity prices are still working their way through the region,” it said.
The credit watchdog said while the region will still be led by China and likely still outperform the rest of the global economy, Asia-Pacific will need to adapt to ensure continued relatively strong, balanced, and sustainable growth.
“From a regional growth perspective, we remain concerned about the quality of growth in China and its sustainability,” it said.
For China, S&P maintained its 6.3 percent GDP growth forecast for 2016 and 6.1 percent for 2017.