Fitch raises Phl growth forecast

MANILA, Philippines - Fitch Ratings raised yesterday its full-year economic growth forecast for the Philippines while cutting those for other Asian countries, as the credit rating firm  cited the  increase in investment spending and  resilient inflow of remittances from overseas Filipinos.

In a report, the debt watcher revised its 2013 Philippine gross domestic product (GDP) growth forecast to 6.2 percent from the 5.5 percent estimate made last December.  The figure is higher than the 5.7-percent average growth forecast for emerging Asia, which also was cut from 6.4 percent earlier.   

“Fitch has made a substantial upwards revision to its 2013 growth forecast for the Philippines... reflecting a pick-up in investment spending and support from resilient remittance inflows,” the credit rating firm said.

The new figure is within the Philippine’s  six- to seven-percent growth target for  2013.

The Philippine economy expanded   7.5 percent in the second quarter, the fastest pace recorded in Southeast Asia. It also represented a fourth consecutive quarter that the country saw a growth of more than seven percent due to higher government spending and strong domestic consumption.

This brought first half growth to 7.6 percent, which is already above the government’s target and also among the fastest in the region.

Despite the upgrade, Fitch’s new forecast is below Standard & Poor’s, which expects the Philippine economy to grow   7.1 percent this year, and Asian Development Bank’s seven percent growth forecast.

It is, however, the same with World Bank’s   6.2 percent growth forecast announced in April.

In cutting its growth forecast for the rest of emerging Asia, Fitch said the looming increase in global interest rates and low commodity prices would weigh on their economic prospects.

“Emerging Asia faces its weakest growth outlook since 1998. However, slowing growth in itself is generally not a rating driver for Emerging Asian credits,” Fitch said.

“Emerging Asia remains a relatively fast-growing region. The projected expansion of 5.7 percent in 2013 still exceeds the figure for all emerging markets of four percent,” it added.