Moody's dials down 2021 growth forecast for PH again

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Metro Manila (CNN Philippines, September 17) — Moody’s Investors Service once again slashed its growth projection for the Philippine economy this year as the country continues to grapple with the COVID-19 health crisis.

The international debt watcher now forecasts economic output will only grow by 4.8% for the year, down from its latest 5.8% forecast in July. July’s figure was also a downgrade from its 7% projection in January. 

Moody’s noted in a credit opinion that the return of tight lockdowns in August due to another surge in infections was “weighing on the outlook for growth in the third quarter of 2021 and delaying the normalization of economic activity further.”

September’s prospect dwells within the 4-5% set by economic managers for the year, with the team also citing the reimposition of stricter quarantine measures amid the feared Delta variant’s threat.

“As of mid-August, only 17% of the population has received at least one dose of a COVID-19 vaccine and 11% was fully inoculated, underscoring the ongoing risks related to the near-term growth outlook,” the credit rater explained.

These developments also prompted Moody’s to also roll back its growth projection for the country next year from 6.8% to 6.5%.

Still, Moody’s espouses a “Baa2 stable” outlook for the Philippines,

It said this “reflects the view that the recovery from the acute shock posed by the coronavirus pandemic will restore rapid economic growth relative to peers, complemented by the stabilization and eventual reversal of the deterioration in fiscal and debt metrics."

However, the rating agency clarified this is “balanced against the risk” that the country’s economic potential is “damaged more significantly” than they assume at present or fiscal and economic reform momentum not making a return.

It added that this could leave "the Philippines' economic and fiscal strength weaker."