S&P: Philippines’ infra plans to be closely watched in 2019
MANILA, Philippines — Huge infrastructure plans in the Philippines are among the developments in the Asia-Pacific that will be closely watched in 2019, a global debt watcher said.
In a report published Monday, S&P Global Ratings said infrastructure programs in Developing Asia — especially in the Philippines, Indonesia and India — are “to look for” in 2019, but flagged “uncertainties” on the feasibility of some government-driven projects in the region.
“Healthy regional [gross domestic product] growth support demand for transportation infrastructure. The existing infrastructure shortage cushions the impact of any slower economic growth,” S&P said.
“Rising interest rates, high currency volatility and an intensifying trade dispute can create some headwinds,” it added. “Tighter funding due to elevated macro risks may pause or reduce some infrastructure investments.”
Widely known as the “Build, Build, Build” program, the Duterte administration plans to supercharge economic growth by upgrading the country’s dilapidated infrastructure, which policymakers qualified as one of the reasons why the Philippines had lagged behind its Southeast Asian peers for so long.
In a September report, S&P said the mid-term elections in May 2019 “can create policy shifts” that may affect the Philippines’ infrastructure push.
READ: S&P: 'Policy shifts' after 2019 polls may affect Philippine infra development
“While economic momentum is strong, policy and macro risks are rising and could deter investment. Potential obstacles include a sharp currency depreciation, global trade war, and higher interest rates,” S&P said in its September report.
“Added to that, the region has a heavy political calendar going into 2019. Regime changes... may spur investors or governments to reconsider large infrastructure projects,” it added.
In the third quarter, the Philippine economy slowed down to a three-year low of 6.1 percent, as surging borrowing costs and red-hot inflation weigh on consumer spending, which has traditionally been the driving force behind growth.
But some economists said government spending should provide some support to the economy as the Duterte administration’s massive public infrastructure program progresses. — Ian Nicolas Cigaral
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