LOCAL output growth variance reflected as the GDP volatility the past four years in the Philippines has proven more stable than in similarly rated countries around the world, according to London-based credit watcher Fitch Ratings.
From 2010 to 2014, for instance, Fitch analysts said the country’s so-called GDP volatility significantly improved to 2 percent during the period and compared more favorably against the 2.7-percent volatility rate exhibited by peer countries around the world rated as “triple B” or “BBB” economies by Fitch.
“Triple B”-rated countries belong to a group of economies whose credit is acknowledged as having sufficiently attractive investment qualities.
According to Fitch, GDP expansion in the Philippines averaged 6.3 percent during the four-year assessment period. This was markedly higher than the median 3-percent growth average exhibited by similarly rated peers.
Also, the Philippines was seen to outperform its peers this year no matter the lower–than-expected growth forecast for the $285-billion Southeast Asian economy.
“Fitch expects the economy to still expand at double the pace of the ‘BBB’-rated median in 2015,” the ratings agency said.
Fitch has lowered its forecast for real GDP growth in the Philippines this year to 5.6 percent from 6.3 percent originally.
This developed as weak net exports weighed heavily on economic performance and lower actual macroeconomic numbers reported in the first half of the year.
The ratings agency expects the country’s “BBB”-rated peers to grow at an average of 2.7 percent this year.
“The economic environment is conducive for growth in the medium term. Inflation is expected to fall in the low end of the BSP’s [Bangko Sentral ng Pilipinas] target range of 2 percent to 4 percent for 2015, reducing the need for further monetary tightening.
Dry weather conditions associated with El Niño have yet to translate into inflation pressure. Continued strength in the real-estate market should support private-sector construction activity,” Fitch said.
The Philippines, however, is not without risk as Fitch warned of institutional weaknesses such as weak governance indicators, low GDP per capita and low revenues and grants as a share of GDP.