S&P: 6.5% or higher GDP growth ‘very easily achievable’

By Kris Crismundo

July 3, 2018, 8:06 pm

MANILA -- Credit rating agency S&P Global Ratings has a bright outlook for the Philippine economy as demographics and economic policy remain conducive to the advancement of the country’s gross domestic product (GDP).

In a webcast Tuesday, S&P Asia Pacific Economist Vincent Conti said GDP growth of 6.5 percent and above for the next few years is “very easily achievable” for the Philippines.

“And the reason for that is very favorable demographic trends that continue to benefit the Philippines particularly through providing a very mobile and effective labor force that has generated a lot of investments and consumption onshore,” said Conti.

Conti added that the government’s economic policy “seems to be very stable” and is expected to have continuity.

“A lot of positives from the economic policy as well. The ramping up of infra program is one of the relatively newer additions to the policy toolkit and that’s actually a positive in that it can generate even further potential growth farther into the future,” he said.

This was also echoed by S&P Director for Financial Institution Ratings Ivan Tan.

Tan said businesses are likewise confident with the policy environment in the country, particularly citing the tax reform program of the administration.

“For instance, for the first time in quite a number of years seen some degree of tax reforms being carried out in the Philippines,” said Tan.

“This is expected to go on over the remaining years of the administration, which would serve to some extent stabilize the government’s revenue base and at the same time, hopefully provide more funds for infra which we think everyone agrees the Philippines does need,” he added.

For S&P Senior Director for Sovereign Ratings and International Public Finance Kim Eng Tan, he noted that the second package of the tax reform program is “unlikely to directly affect” its rating for the country.

“The key thing we are looking at tax reform is that if the government actually has the ability to carry this out,” he said.

“To the extent that this shows greater proactiveness on the part of the policy makers and an improvement in the institutional and governance support for the sovereign ratings, it’s one of the reasons why we now have a positive outlook for the Philippines’ sovereign rating,” he added. (PNA)