THE recent outlook downgrade on the Philippines’s sovereign rating from international credit watcher Fitch Ratings is a “useful heads up” for the economy, private analysts said in a virtual briefing on Wednesday.
In its virtual presser on its latest analysis on the Philippine economy, economists at First Metro Investments Corporation (FMIC) and University of Asia and the Pacific (UA&P) said Fitch’s reversion of its “stable” outlook on the Philippines down to “negative” earlier this week could be a reminder of the pitfalls to recovery along the way.
First Metro President Jose Patricio Dumlao said the country should use the next 18 to 24 months to beef up the recovery path of the country to ultimately avoid an actual downgrade.
Outlooks of credit watchers are indicators of where the country’s sovereign rating is usually headed if no intervention and development is put in place. The outlooks are usually indicative of an economy’s situation in the next 18 to 24 months.
“We look at the recent rating outlook downgrade by Fitch Ratings constructively. It is more of a reminder that economic recovery requires hard work rather than a negative warning,” Dumlao said.
“It is a useful heads up, too, about the many pitfalls that line up the path to growth and the myriad of the country’s existing economic strengths to overcome these,” he added.
UA&P economist Victor Abola, who was also speaking at the briefing, also expressed confidence in the local economy’s strength, saying there are key indicators that the economy is headed to recovery such as manufacturing and exports and capital goods imports.
FMIC First Vice President and Research Department Head Cristina Ulang noted that investors are not showing any signs of strong distress from the recent action and that the market has “confidence” in the economy even after the downgrade.
Dumlao said they project the country to grow by around 5 to 6 percent by the end of the year, with the infrastructure spending program of the government as one of the main drivers of growth.
“Our dependable and resilient OFW [overseas Filipino workers] remittances, which grew 13 percent year-on-year in April this year, and BPO [business-process outsourcing] services are anticipated to perform even better. As employment starts to pick-up and more people get inoculated, consumer confidence is also expected to improve. The upcoming election next year is likewise anticipated to support growth,” Dumlao added. Bianca Cuaresma