FITCH SOLUTIONS Macro Research maintained its 2020 growth outlook for the Philippines even as it cut the overall global growth forecast due to the impact of the coronavirus disease 2019 (Covid-19) outbreak.
In a note Monday, Fitch Solutions said that it maintained its growth forecast for the Philippines at 6.3% first issued in January.
This level of growth is higher than the 5.8% increase in gross domestic product (GDP) in 2019 but below the 6.5% to 7.5% target range set by the government for the year.
Fitch Solutions’ projections for the Philippines in 2021 and 2022 are 6% and 6.2%, respectively.
However, the research firm said that it revised its global growth forecast to 2.6% from 2.7%, with the growth outlook for China reduced to 5.6% from 5.9%.
“The extent of the slowdown in China and the wider region will depend on how long it takes for authorities to contain the spread of the virus, and as such the longer it takes, the larger the downside risks to growth will be,” Fitch Solutions said.s
Fitch Solutions said more revisions could be coming up given the impact on trade and investment linkages across Asia and the negative growth spillovers of the virus on commodity and tourism channels as China is one of the biggest consumer of commodities and tourism market for many countries.
“The overall impact on growth, however, is still unknown as it will largely depend on how long the Chinese authorities will take to bring the coronavirus outbreak under control,” the report said.
In the Philippines, the National Economic Development Authority (NEDA) said tourism revenue could be dented by about P22.7 billion per month due to the outbreak.
Tourism Secretary Bernadette Fatima T. Romulo-Puyat said her department’s estimate is foregone revenue of about P42.9 billion between February and April due to flight cancellations and event postponements.
“The APAC (Asia-Pacific) region is most at risk given the deep trade, investment and tourism links between the wider region and China,” Fitch Solutions said.
It added that it might cut growth forecasts further for emerging markets amid dampened growth in key trade and commodity-dependent economies with strong linkages to China.
Meanwhile, S&P Global Ratings said that sovereigns in the Asia Pacific are still growing at a healthy pace despite risks arising from the outbreak.
In a note issued Monday, S&P said that pressures that may be building up from the outbreak will likely be “mild and temporary.”
“Growth performances in Asia-Pacific countries are still relatively healthy by global standards. We also have no reason to believe now that the economic damage from the virus will be persistent,” S&P said, adding that the outbreak “does not appear to have materially affected international financial flows.”
Last year, S&P upgraded its credit rating for the Philippines to “BBB+,” citing above-average growth and a strong external and fiscal position.
On Feb. 7, Japan’s Rating and Investment Information, Inc. (R&I) also upgraded the Philippines’ rating to “BBB+,” which is a step away from the “A” rating targeted by the government.
Fitch Ratings last week upgraded its rating outlook on the Philippines to “positive” from “stable,” indicating that its rating could be potentially upgraded. It maintained the Philippines’ rating at “BBB.” — Luz Wendy T. Noble
