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Bacolod City, PhilippinesWednesday, December 19, 2012
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Moody’s further upgrades
RP growth outlook to 6.3%

MANILA – Moody’s Investors Service further upgraded its growth forecast for the Philippines for 2012 to 6.3 percent while the 2013 figure to 5.5 percent on back of continued robust expansion of the domestic economy, a government press release said.

These figures were previously at 5.2 and five percent for 2012 and 2013, respectively.

In the first three quarters this year, the domestic economy grew by 6.5 percent, above the government’s five to six percent full-year target.

For the third quarter alone, growth rose to 7.1 percent, highest in the ASEAN and next to China’s 7.4 percent for the period, the press release said.

In its credit analysis report released December 18, 2012, the debt watcher sees inflation rate to average at 3.1 percent this year and four percent in 2013.

Inflation in the first 11 months this year averaged at 3.2 percent, near the lower end of the three to five-percent target for this year until 2014.

Moody’s also expects a budget gap that accounts to about 2.2 percent of gross domestic product, which is lower than the 2.6 percent of GDP target set by the government. In actual figure, the government has set a P279.1-billion deficit ceiling for this year, the press release said.

To date, Moody’s ratings on the Philippines is a notch below investment grade at “Ba1” with ‘Stable” outlook, upgraded a notch higher from “Ba2” last October on account of continued improvement in economic performance and its medium-term growth prospects.

It currently has a rating range of Baa2-Ba1 from Ba2-B1 for the country.

The report said the recent upgrade in the country’s credit rating “also recognizes positive developments related to institutional quality and fiscal management, as well as financial system and political stability.”

Moody’s sees a “low” event risks for the country due to domestic political stability “reflecting the current president’s unquestioned electoral legitimacy and the popularity of his administration’s focus on good governance.”

Another advantage on the economy is the resilience of the service sector. In particular, the business process outsourcing (BPO) is among the growth drivers as it “continues to record robust growth, especially in voice/call center operations.”

”The outlook for tourism has improved and could be further enhanced as transport equipment and facilities are upgraded ahead of the planned liberalization of regional air travel in 2015 under the ASEAN Open Sky Policy,” it added.*

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