This Sept. 24, 2020 photo shows a view of Makati skyline as seen from Boni, EDSA.
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Economic outlook for Asia-Pacific 'stabilizing' for first time since pandemic started — S&P

Ian Nicolas Cigaral ( - November 30, 2020 - 5:08pm

MANILA, Philippines — Economic outlook for Asia-Pacific countries, including the Philippines, is starting to "stabilize" after months of turmoil brought by the coronavirus pandemic, but uncertainty remains "unusually high" at this point, international debt watcher S&P Global Ratings said Monday. 

What has changed since the outbreak began engulfing economies in the past three quarters is that the probability of an early vaccine is now high while labor markets have proven to be resilient in the region, S&P said in a report. Meanwhile, threats that central banks will prematurely pull out economic support by hastily tightening monetary policy have "receded", it added.

In the Philippines, S&P said that a slow rise of new cases has led to looser movement restrictions that have allowed people to return to work. However, strong typhoons that battered the country in the beginning of fourth quarter could "delay recovery", prompting S&P to maintain its projection of a 9.5% slump this year and growth of 9.6% in 2021.

"We keep our GDP growth forecast for this year and next unchanged. As before, the base-effect-driven high growth rates for the upcoming years mask the fact that the level of GDP will remain far below the pre-COVID trend even by the end of our forecast horizon," the credit rating agency said of the Philippines.

In the third quarter, the Philippine economy shrank at an annualized rate of 11.5%, easing from the record-breaking 16.9% collapse recorded at the height of strict lockdowns in the second quarter.

But that the latest GDP print sustained a double-digit contraction convinced many analysts that the road to recovery would be a rocky one. For the first 9 months, state statisticians said GDP shrank 10% year-on-year.

With situation getting better for the region, S&P upwardly revised its economic forecasts for Australia, Thailand, Hong Kong and Taiwan. Meanwhile, projections were slightly downgraded for Japan, Indonesia, Malaysia and Singapore.

Apart from the Philippines, S&P's forecasts were also unchanged for China, India and Korea. Overall, the debt watcher still sees the region's economy shrinking 2% in 2020 before expanding almost 7% next year.

"Our economic forecasts for Asia-Pacific are stabilizing. Uncertainty remains unusually high but little in the past three months has led us to make large revisions to our views," S&P explained.

"Growth can be better or worse than we think and, for the first time in 2020, we see the probability of both as being roughly the same," it added.

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