MANILA – An analyst of S&P Global Ratings forecasts the surplus in the country’s current account to continue at least until 2023, which will back the country’s external setting.
Andrew Wood, director for Asia Pacific Sovereign Ratings and S&P Global Ratings lead analyst for the Philippines, said the country registered a current account surplus even during the pandemic, a turn-around from posting deficit in recent years.
“We do believe that’s going to remain the case for at least one or two more years, which will continue to support the external settings. And we expect this to remain strong over the next few years,” he said during the virtual economic briefing by Philippine economic officials for Japanese investors on Tuesday.
The country registered CA deficits in recent years due to stronger growth in imports amid the continued increase in demand in line with the economic expansion.
Wood said S&P analysts forecast that the country’s external settings will continue to support the economy’s credit ratings, which to date stood at BBB+ with stable outlook.
He said economic recovery of the domestic economy “is somewhat delayed”, adding “we do expect for the pace of the recovery and momentum to pick-up steam beginning next year.”
S&P forecasts a below 5-percent growth, as measured by gross domestic product (GDP), for the Philippine economy this year.
But it expects a 7.7-percent domestic economic expansion for 2022 as the government achieves vaccination goals.
Wood said the credit rater expects the Philippine economy, once it regains its strength, to be among the fastest growing economy in the region starting 2022 on expectations of stronger pick-up of domestic investments, consumption, and exports.
“We expect GDP per capita to come back to roughly where it had been by the end of 2019 at the end of this year. And then to continue to achieve new highs beyond that,” he said.
He added the pace and scale of economic recovery will be significant on the trajectory of its credit ratings.
Wood said the credit rater considers domestic economic growth to be supportive of the country’s credit ratings.
“We expect faster nominal GDP growth to be supportive of fiscal consolidation over that same period of time, which will entail much lower fiscal deficits and a stabilization in the government’s debt stock over the next three years,” he added. (PNA)
