CREDIT rater Standard and Poor’s (S&P) sees a 5-percent economic growth for Philippines next year.

The report posted in their official website said that the Philippine economy could grow by 5 percent next year, and that a 4.9-percent growth in the last quarter of the current year is being forecasted, setting the month of July as their base case scenario.

The recent outlook for Philippine growth for the second half and the coming year surpassed the recent S&P forecast of 4.3 percent and 4.5 percent, respectively, using the same base case scenario.

“The outlook for the second half is still subject to risks from falling external demand. However the main growth factors—domestic consumption and, its underlying support, remittances—remain robust,” S&P said.

It added that domestic consumption is benefitting from a tourism and credit surge, and private investment and public spending have also picked up.

For the inflation rate, S&P sees 3.5 percent in 2012 and 3.8 percent in 2013, luckily still within the target of the Bangko Sentral ng Pilipinas’ 3-percent to 5-percent target.
In September, the inflation rate eased at 3.6 percent compared to 3.8 percent of August, and 4.7 percent in 2011.

“The country’s gross domestic product [GDP] is also expected to post a fiscal deficit of 2.5 percent this year, declining to 2 percent next year. The government has capped the deficit at P279.1 billion, or 2.6 percent of GDP for 2012 and P241 billion, or 2 percent of the GDP, for 2013.” S&P added.

It was also noted that while the current fiscal trend is fundamentally favorable, structural revenue reforms still remain outstanding, and administrative reforms that are now producing higher revenues can only do so much.

“We do not expect the positive trend of rating changes to continue in the coming 12 to 18 months . . . Where credit metrics are already weak in their rating categories, policy mistakes or hesitance could drag sovereign ratings down,” it added, noting that their warning that Asia may face severe risks to its creditworthiness might stop a string of positive rating actions.

Just this first half, S&P rated the Philippines at BB+, putting it just one notch below investment grade, saying that this makes the country very much able to service its maturing obligations to foreign creditors.