FITCH Ratings has revised downward Philippine gross domestic product (GDP) growth forecast for this year as it noted the impact of the rising coronavirus disease 2019 (Covid-19) cases on the economy.
“South and Southeast Asian economies, on the other hand, are struggling with a resurgence of the virus — especially in the Philippines and India — that, combined with weak tourism prospects and slow vaccine rollouts, is weighing on recovery or posing risks,” it said in a report released on Tuesday.
In particular, the credit ratings agency said it sees the Philippine economy rebounding at a modest pace, expanding by 6.3 percent and 8.3 percent in 2021 and 2022, respectively.
Fitch’s 2021 growth outlook is a downward adjustment from its earlier projection of 6.9 percent.
The revised figure falls outside the government’s official estimate range of 6.5 percent to 7.5 percent, but a turnaround of the Philippine economy’s 9.6-percent contraction last year.
“Daily Covid-19 infections have again been on the rise recently, with lockdowns announced in the national capital regions and certain neighboring provinces,” Fitch emphasized.
Rising Covid-19 cases since mid-March has prompted the government to impose the
enhanced community quarantine (ECQ) in the National Capital Region and adjacent provinces of Bulacan, Cavite, Laguna and Rizal on March 29 and was extended until April 11. This was relaxed to modified ECQ on April 12.
Fitch earlier affirmed of Philippines’ ‘BBB’ investment grade credit rating with a stable outlook. It said the country “balances modest government debt relative to peers, robust external buffers and still-strong medium-term growth prospects, notwithstanding the deep pandemic-induced economic contraction, against relatively low per capita income and indicators of governance and human development compared to peers.”
It, however, warned the country against insufficient post-coronavirus fiscal consolidation, which does not lead to a clear downward trajectory in debt-to-GDP over the medium term.