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S&P Global Ratings said the Philippine economy is likely to contract 9.9 percent this year before recovering in 2021.
In a report released to the media on Tuesday, S&P projected that the country’s economic growth would remain unchanged at -9.5 percent in 2020, but expand 9.6 percent the next.
“We keep our forecast for GDP (gross domestic product) growth unchanged for this year and next. As before, the high growth rates driven by the base effect for the coming years mask the fact that the level of GDP will remain well below the pre-Covid trend (coronavirus disease 2019) even at the end of our horizon of forecast, ”S&P said. .
The credit rating agency said the total number of Covid-19 infections is trending downward “at a slow pace,” which it said resulted in “some improvements in population mobility and employment in recent years. months. “
“The economy is also gradually improving, but the disruption of a recent typhoon will delay the recovery,” he added.
S&P noted that inflation remains high relative to the decline in domestic activity, in part due to disruptions on the supply side of recent typhoons.
“But with growth so low, we are still targeting one last rate cut from [the] Bangko Sentral ng Pilipinas after the move this month, before a long hiatus, ”he said.
Recently, the central bank announced to cut its loan, loan and overnight deposit rates by 25 basis points (bps) to 2.00 percent, 1.50 percent and 2.50 percent, respectively.
S&P also continues to highlight the small fiscal response so far, around 2.3 percent of GDP.
“We expect a boost from the fiscal impulse in the second half of next year if key infrastructure projects start to accelerate again,” he added.
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