Moody’s trims 2019 growth forecast to 6%
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Wed, 29 May 2019 16:25:03 +0000
MOODY’S Investors Service cut its Philippine growth forecast for 2019 to 6 percent from the previous 6.2 percent, citing the delayed approval of this year’s budget, the lower-than-expected first-quarter expansion and the still-tight monetary policy as reasons behind the downward adjustment.
On the sidelines of the “Economy in Focus” briefing held by the Economic Journalists Association of the Philippines and the Aboitiz Group of Companies in Makati City on Wednesday, Moody’s
Vice President and Senior Credit Officer Christian de Guzman told reporters the debt watcher did so after taking “into account the budget impasse [and] the first-quarter growth, as well as some of the other things, like the external headwinds.”
The revised projection was lower than last year’s actual growth of 6.2 percent and falls at the lower end of the government’s downwardly revised 6.0-7.0 percent target.
A dispute between the Senate and the House of Representatives over alleged insertions resulted in the four-and-a-half-month delay of the passage of this year’s budget. This forced the government to run on last year’s budget, limiting it to spend for items detailed in the 2018 outlay and not on programs and projects supposed to be implemented this year.
This put total national government spending in January to March — which include expenditures for infrastructure and capital outlay, maintenance, personnel services and subsidies — at P778 billion, up 0.8 percent or P6 billion from the amount in the same period last year.
This resulted in a lower-than-expected 5.6 percent Philippine economic growth in the first three months of the year, well below the government’s target.
De Guzman also noted that the Bangko Sentral ng Pilipinas’ (BSP) monetary policy stance remained tight, despite the 25-basis-points cut in interest rates it implemented last month.
“Let’s not forget that the policy tightening was 175 basis points (last year). So, the easing so far is 25 bps. I don’t think it’s quite precise to say that they are in an easing mode yet, because the conditions themselves continue to be tighter than they were than this time last year,” he said.
Moody’s latest economic view on the country came a day after another international credit ratings agency, S&P Global Ratings, said the worsening trade war between the United States and China and an expected resurgence in inflation would pose major risks to economic expansion.
This prompted S&P to maintain its downwardly revised 6.3 percent growth outlook for the country’s gross domestic product (GDP) this year.
Last week, a unit of the Fitch Group, Fitch Solutions, slashed its own growth projection for the country to 5.9 percent from 6.1 percent, also citing the lower-than-expected economic expansion in the first quarter and US-China trade tensions, as well as soft external demand, as reasons behind the reduction.
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