By Lawrence Agcaoili (The
Philippine Star) | Updated March 23, 2016 - 12:00am
In a report titled “Growth
outlook of ASEAN economies to diverge in 2016 and 2017,” Moody’s said the gross
domestic product (GDP) of the Philippines would expand faster at six percent
for 2016 and 2017. Philstar.com/File
MANILA, Philippines –
Moody’s Investors Service said domestic demand-driven economies among member
countries of the Association of Southeast Asian Nations (ASEAN) led by the
Philippines are expected to grow faster than export-oriented economies in the
next two years.
In a report titled “Growth
outlook of ASEAN economies to diverge in 2016 and 2017,” Moody’s said the gross
domestic product (GDP) of the Philippines would expand faster at six percent
for 2016 and 2017.
The country’s GDP growth
eased to 5.8 percent last year from 6.1 percent in 2014 due to weak global
demand.
“Economic expansion in
Indonesia and the Philippines would likely strengthen in 2016 and 2017, with
domestic demand providing the main engine of growth,” Moody’s said.
The debt watcher said gross
fixed capital formation growth is accelerating rapidly in the Philippines and
is picking up pace in Indonesia.
“In each case, public
investment contributed to the pickup as governments in both countries sought to
gain further traction in developing much-needed infrastructure,” it added.
Moody’s said lower oil
prices have provided greater lift to economic growth in the Philippines with
household consumption growing in excess of six percent for only the second time
over the past 25 years.
On the other hand, the debt
watcher said Vietnam is expected to book the fastest GDP growth this year at
6.1 percent before slowing down to six percent in 2017.
“Vietnam, meanwhile, will remain a regional
growth outperformer on the back of robust manufacturing activity and strong
foreign direct investment flows,” Moody’s said.
Indonesia’s GDP is expected
to grow 4.8 percent this year and 5.4
percent next year.
However, Singapore,
Thailand, and Malaysia are expected to post slower GDP expansion compared with
Vietnam, the Philippines and Indonesia.
“Against a backdrop of subdued global demand,
the growth prospects of ASEAN’s major export-orientated economies, Singapore,
Malaysia, and Thailand, will remain weaker than those of more domestic
demand-driven economies, Indonesia and the Philippines in 2016 and 2017,”
Moody’s said.
The debt watcher pointed
out the overall economic impact of the slumping exports growth would vary based
on the relative importance of trade to GDP.
Total trade accounts for
346 percent of GDP in Indonesia, 131 percent in Malaysia, and 130 percent In
Thailand.
On the other hand, total
trade accounts for 58 percent of GDP in the Philippines and 41 percent in
Indonesia.
“As such, these three economies are
susceptible to a prolonged period of subdued global demand via both the export
channel and weaker investment demand,” Moody’s added.
The rating agency explained
private consumption in Singapore, Thailand, and Malaysia would be constrained
by high household debt burdens.
“Household debt-to-GDP in
these three economies has risen rapidly in recent years to elevated levels.
Weaker household balance sheets could therefore weigh on banking sector asset
quality, and limit the effectiveness of monetary policy in stimulating consumer
spending,” it said.
Moody’s upgraded the
country’s credit rating to Baa2 or two notches above “junk” status in December
2014 on the back of the government’s reduced debt levels and the country’s robust
economy.
Standard & Poor’s has
assigned a credit rating of “BBB” or two notches above “junk” status while
Fitch Ratings rates the country’s debt at “BBB-“ or the first notch in
investment grade ratings.
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