S&P upgrades Phl growth forecast to 6.6% this year

MANILA, Philippines - International credit rating agency Standard & Poor’s raised  its 2014 economic growth forecast for the Philippines to 6.6 percent  from the original 6.4 percent, citing post-disaster rebuilding efforts after Super Typhoon Yolanda as a reason for the revision.

“In the Philippines, growth could normalize from its rapid pace in 2013, although post-disaster rebuilding efforts could provide an offset in the short-term,” S&P said in a report published yesterday.

Still, the  revised forecast fell below the robust 7.2 percent growth recorded  last year and the 6.8 percent expansion posted in 2012.

The government expects the economy to grow by 6.5 to 7.5 percent this year.

The government in December said it plans to spend P360.8 billion over the next three years for rehabilitation and rebuilding efforts following the devastation brought about by Super Typhoon Yolanda.

Apart from a baseline forecast of 6.6 percent, S&P said Philippine economic growth may slide to 5.3 percent this year or accelerate to a high of seven percent.

‘’One of the downside risks to country’s growth is the rising threats to China’s financial sector as the latter is the second biggest exports destination of the Philippines, ‘’the S&P said in a report.

The debt watcher expects Philippine economic growth to slow down to six percent next year and to slightly accelerate to 6.1 percent in 2016.

Both projections are below the government’s seven to eight percent target in 2015, and 7.5 to 8.5 percent assumption in 2016.

S&P in May last year upgraded the country’s credit rating to investment grade from junk, citing the Philippines’ robust economic growth and institutional reforms implemented by the Aquino administration.

S&P rates the country with a ‘BBB-’ with a stable outlook.