MANILA – S&P Global Ratings sees a decline in the Philippine economic growth to 4.2 percent this year as a result of the coronavirus disease 2019 (Covid-19).
This projection is way lower than the debt rater’s projection last February 19 when it slashed its forecast to 6.1 percent from 6.2 percent previously.
S&P, however, sees a huge recovery for the Philippine economy starting in 2021 with growth projected at 7.5 percent.
It also forecasts 2022 growth to be at 6.7 percent, and the 2023 output at 6.6 percent.
In a report on the updated forecast, the debt rater acknowledged a “high degree of uncertainty” about the rate of spread and peak of the coronavirus outbreak.
“Some government authorities estimate the pandemic will peak in June or August, and we are using this assumption in assessing the economic and credit implications. We believe measures to contain Covid-19 have pushed the global economy into recession and could cause a surge of defaults among nonfinancial corporate borrowers,” it said.
It added new assumptions will be released as Covid-19 evolves.
The government’s growth target this year ranges between 6.5-7.5 percent, and 7-8 percent for 2021 and 2022.
Last year, the domestic economy expanded by 5.9 percent, an eight-year low as a result of the delay in the approval of the 2019 national budget, which was signed into law only on April 15, 2019.
Economic managers said the budget approval delay hampered the government’s ability to meet its spending program on social services and infrastructure projects, which contributed to the lower growth.
Meanwhile, S&P projects Philippines’ inflation rate to average at 1.6 percent this year, below the government’s 2-4 percent target until 2021 while forecasts for the next two years are 2.9 percent and 3 percent, respectively.
As of last February, domestic rate of price increases slowed to 2.6 percent from the previous month’s 2.9 percent.
The Bangko Sentral ng Pilipinas (BSP) forecasts inflation to average at 2.2 percent this year and 2.4 percent in 2021. (PNA)
