Vol. XXII, No. 89 [ BusinessWorld Online ]
Thursday, November 27, 2008 | MANILA, PHILIPPINES
ONGOING global financial turmoil will have a negative impact on Philippine economic growth but the country’s creditworthiness will not be affected as long as the government is able to keep its fiscal position in good shape, debt watcher Standard & Poor’s (S&P) said.
S&P, in its "Asia-Pacific Markets Outlook 2009," cut its 2008 Philippine growth forecast to 3.8-4.3%, down from 4.3-4.8% earlier, citing worsening global economic conditions. Next year’s outlook was also trimmed to 3.3-3.8% from 4-4.5%.
The official government targets are 4.1-4.8% for 2008 and 3.7-4.7% next year.
However, S&P said strong domestic demand and supportive monetary policy stances will enable economies in Asia Pacific to "roll with the punches."
"By the standards of 2006 and 2007, 2009 will not be an outstanding year by any means, but it will reflect the region’s resilience and collective ability to moderate fluctuations around a strong growth trend rate," S&P chief economist for the Asia-Pacific Subir Gokarn told a teleconference.
But S&P warned that liquidity and funding remained key risks given difficult operating conditions worldwide.
The Philippines’ credit ratings, meanwhile, will remain at "BB-" — below investment grade — with a "stable" outlook as long as fiscal consolidation continues.
"Our outlook will veer towards the negative direction if there will be strong fiscal deterioration," S&P Regional chief credit officer Ian Thompson said in a telephone interview.
A slight increase in the budget shortfall will not necessarily result in a ratings downgrade as additional pump-priming spending along with other monetary measures will ensure that the local economy remains in good shape, Mr. Thompson said.
The government expects a budget deficit of P100 billion next year, up from this year’s P75-billion cap, and has warned that it may not meet a plan to balance its finances by 2010. — G. S. dela Peña
