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Asia-Pacific economic outlook ‘stabilizes’ for first time since pandemic began – S&P
Ian Nicolas Cigaral (Philstar.com) – November 30, 2020 – 5:08 pm
MANILA, Philippines – The economic outlook for Asia-Pacific countries, including the Philippines, is beginning to “stabilize” after months of turmoil brought on by the coronavirus pandemic, but uncertainty remains “unusually high” at this time, said international debt observer S&P Global Ratings. Monday.
What has changed since the outbreak began to affect economies in the past three quarters is that the likelihood of an early vaccine is now high, while labor markets have proven resilient in the region, S&P said in a report. Meanwhile, threats that central banks will prematurely withdraw economic support through a hasty tightening of monetary policy have “receded,” he added.
In the Philippines, S&P said a slow increase in new cases has led to looser movement restrictions that have allowed people to return to work. However, the strong typhoons that hit the country early in the fourth quarter could “delay recovery”, prompting S&P to maintain its forecast of a 9.5% decline this year and 9.6% growth in 2021.
“We are keeping our GDP growth forecast for this year and next unchanged. As before, high growth rates driven by the base effect for the next few years mask the fact that the level of GDP will remain well below the pre-COVID trend even at the end of our forecast horizon, “the Philippine credit rating agency said.
In the third quarter, the Philippine economy contracted at an annualized rate of 11.5%, easing from the record collapse of 16.9% recorded at the height of tight lockdowns in the second quarter.
However, the fact that the last GDP release had a double-digit contraction convinced many analysts that the road to recovery would be difficult. During the first 9 months, state statisticians said that GDP fell 10% year-on-year.
With the situation improving for the region, S&P revised up its economic forecasts for Australia, Thailand, Hong Kong and Taiwan. Meanwhile, projections were lowered slightly for Japan, Indonesia, Malaysia and Singapore.
Apart from the Philippines, the S&P forecasts were also unchanged for China, India and Korea. Overall, the debt watcher still sees the region’s economy shrinking 2% in 2020 before expanding nearly 7% next year.
“Our economic outlook for Asia-Pacific is stabilizing. Uncertainty remains unusually high, but little in the past three months has prompted us to make major revisions to our views,” S&P explained.
“Growth may be better or worse than we think and, for the first time in 2020, we see the probability that both are roughly equal,” he added.
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