Connect with us

Hi, what are you looking for?


S&P raises growth forecast for PHL


THE PHILIPPINES is likely to grow by 5% this year, boosted by the stronger-than-expected rebound in the third quarter, according to S&P Global Ratings.

However, S&P warned that the Omicron variant of the coronavirus disease 2019 (COVID-19) could pose a new risk to the region’s recovery.

“Growth in the Philippines surprised on the upside with year-over-year expansion of 7.1% [in the third quarter]. This surpassed the consensus expectation for a 4.8% increase, on strong consumer activity,” S&P said in a note on Tuesday.

The debt watcher’s latest estimate of 5% gross domestic product (GDP) growth is faster than the 4.3% forecast it gave in August and matches the upper end of the government’s 4-5% growth forecast for the year. Year to date, Philippine economic growth is at 4.9%.

Household spending, which accounts for about three-fourths of GDP, rose by 7.1% year on year in the third quarter.

The Philippines was an outlier compared with its regional neighbors which saw weaker economic activity in the July to September period amid a Delta-driven surge, the ratings agency said.

The country is expected to grow faster this year than Indonesia (3.3%), Malaysia (2.6%), Vietnam (1.9%), Thailand (1.2%), but slower than Singapore (6.5%), based on S&P projections.

However, it should be noted that the Philippine economy had the steepest contraction in the region at 9.6% in 2020 as it imposed one of the world’s strictest and longest lockdowns.

S&P said Philippine GDP is projected to rise by 7.4% in 2022. This is slightly slower than the 7.7% it gave in August due to the base effect of the stronger economic growth it forecasts for 2021.

S&P noted Southeast Asia’s growth is gaining traction as restriction measures are gradually relaxed, vaccination rates are picking up and travel restrictions being eased.

“This is leading to a gradual improvement in domestic demand and widening improvement in manufacturing activity in the fourth quarter,” it said.

However, S&P warned that the Omicron variant may threaten the region’s rebound, as governments may reimpose short-term containment measures.

“We believe the new Omicron variant is a stark reminder that the COVID-19 pandemic is far from over… We believe this shows that, once again, more coordinated, and decisive efforts are needed to vaccinate the world’s population to prevent the emergence of new, more dangerous variants,” S&P said.

The Philippines has already fully vaccinated 40.58% or 43.87 million of its population. Officials are hoping to vaccinate 70 million Filipinos by the end of 2021.

Meanwhile, S&P expects inflation in the Philippines to average 4.5% in 2021, above the 2-4% target of the central bank. It is expected to ease to 2.4% in the next two years.

It also sees the Bangko Sentral ng Pilipinas keeping its key policy rate steady until the end of 2022, before raising rates to 2.75% by the end of 2023.

Meanwhile, Fitch Ratings in a separate note said that it may be too early to consider the impact of the Omicron variant on global economic forecasts since there is no clear data yet on its transmissibility and severity.

“We currently believe that another large, synchronized global downturn, such as that seen in (first half of 2020), is highly unlikely but the rise in inflation will complicate macroeconomic responses if the new variant takes hold,” it said.

The possibility of nationwide lockdowns to curb the spread of Omicron will continue to be a risk to the global economy, Fitch said. It noted that tourism and travel will likely be disrupted once again, and the shift to services from goods consumption will likely slow.

“However, recent increases in inflation will complicate any policy response to Omicron, which could have an inflationary effect if new lockdowns or voluntary social distancing constrain labor supply recoveries or exacerbate global supply-chain shortages and bottlenecks. Hence, we believe central banks could be wary of delaying the normalization of monetary policy settings in response,” Fitch said. — Luz Wendy T. Noble

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



Have your team clocked less sick days during the pandemic but are now on the verge of burnout? You’re not alone … Providing right-first-time...


Have your team clocked less sick days during the pandemic but are now on the verge of burnout? You’re not alone … Providing right-first-time...


The UK government will invest £100m in Britishvolt as the car battery manufacturing startup seeks to build Britain’s first large-scale “gigafactory” in the north-east...


Bankers and accountants are among those being summoned back to their offices after the government scrapped its work-from-home guidance in England with immediate effect....


The kitchens of Michelin-starred restaurants too often descend into alternative “moral universes” where bullies and bad behaviour thrive, a study has suggested. While Gordon...


A company controlled by the Duke of York and used to manage his investments is more than £200,000 in debt, according to newly filed...

You May Also Like


THE PHILIPPINES is poised to end the year with a stronger economic growth, after a better-than-expected third quarter, experts said at the BusinessWorld Virtual...


The Philippines on Friday reported 310 coronavirus (COVID-19) infections, bringing the total number of infections to 2.84 million since the pandemic started in 2020....

Top News

Manufacturers face no dearth of options when it comes to bonding solutions in the modern era; however, over time, pressure sensitive adhesives are increasingly...

Top News

An integral component of the global economy, the automotive industry, a flourishing behemoth in itself, has been fraught with many challenges since the last...

Disclaimer:, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2022 InvestmentDiets. All Rights Reserved.