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Philippines, rest of Asia Pacific in for slower growth, says Moody's
Publication Date : 21-03-2014
The Philippines and the rest of Asia Pacific may see economic growth decelerate this year amid increasingly challenging conditions within and outside the region.
Moody’s Analytics, the research arm of credit rating agency Moody’s Investor Service, said in a new report that the Asia Pacific region’s performance might suffer in 2014 due to weak demand from the United States, and China’s intentional growth slowdown.
“Monthly trade data from Korea, Taiwan and China provide an early regional barometer—China as a source of demand and Korea and Taiwan as a gauge of global manufacturing,” Moody’s Analytics senior economist Glenn Levine said.
“Combining January and February figures to remove Lunar New Year distortions, it is becoming clearer that Gross Domestic Product (GDP) growth in the first quarter will be weaker than in the final three months of 2013,” he said.
Moody’s said China, the world’s second largest economy and the region’s main demand driver, may miss its goal of a growth of 7.5 per cent this year.
The Philippine economy is seen growing by 5.8 per cent this year. Although this is better than the previous 5.4-per cent forecast, the projection is still slower than the 7.2-per cent expansion in 2013.
Levine said the Philippine economy’s projected growth would also be lower than the country’s “potential” of 6.5 per cent.
He said the firm doubted the Philippine government’s ability to sustain investment spending, which rose by an “astronomical” 15 per cent in 2013. “We wouldn’t expect to continue at that pace indefinitely,” he said.
The firm’s forecast is slower than the government’s growth target of 6.5 to 7.5 per cent for this year.
Levine also noted that the effects of Typhoon “Yolanda” (Haiyan) were not as significant as expected.
Shortly after the typhoon hit Visayas last November, the government projected that fourth quarter growth would slow down to 4.1 per cent.
Actual fourth-quarter growth was clocked in at 6.5 per cent, beating most expectations.