Impact of strong typhoons to prolong PH economic recovery — S&P

Metro Manila (CNN Philippines, November 30) — The Philippine economy is on its way to bouncing back from the coronavirus pandemic, but recent typhoons caused a setback, S&P Global Ratings said.

In a new set of forecast for Asia-Pacific economies, the global credit rater noted the slow downtrend in new COVID-19 cases in the country, which allowed for freer movement and more jobs as quarantine rules were relaxed.

However, recent typhoons dampened the gradual pick-up in economic activity, S&P said. The country incurred billions of pesos in damage to agriculture and infrastructure in the aftermath of Typhoons Quinta and Ulysses and Super Typhoon Rolly.

S&P maintained its projections for the Philippines: negative 9.5 percent for this year, and a recovery of 9.6 percent in 2021.

"As before, the base-effect-driven high growth rates for the upcoming years mask the fact that the level of GDP will remain far below the pre-COVID trend even by the end of our forecast horizon," it added.

The debt watcher also noted the country's inflation rate "remains high" despite the slump in domestic activity, which it partially attributed to supply disruptions caused by typhoons.

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S&P also said it expects one last rate cut from the Bangko Sentral ng Pilipinas "before a long pause." In November, the BSP slashed policy rates to a new all-time low of 2 percent in a bid to entice borrowing and spur economic activity.

Forecasts for Asia-Pacific "stabilizing"

S&P also noted that its economic projections for the region "stabilized for the first time" since the pandemic.

"Uncertainty remains unusually high but little in the past three months has led us to make large revisions to our views," it said, noting growth forecasts for Asia Pacific at negative 2 percent in 2020 and a 6.8-percent rebound in 2021.

S&P made modest revisions in economic forecasts from September, with Indonesia, Japan, Malaysia, Singapore and South Korea seeing declines in 2020. Most economies, however saw tempered projections for 2021, except for China, which received a slight upward adjustment, and South Korea and India, as their forecasts were unchanged.