THE Philippines is expected to grow at a slower pace, as well as other countries in Asia Pacific, as coronavirus implications continue to pose risks to global economies, credit rating agency Moody’s Investors Service said yesterday
From a previous forecast of 6.1 percent, Moody’s now sees the Philippine economy growing by only 5.4 percent.
This is more than a percentage point lower than the low end of the government’s full-year target range of between 6.5 and 7.5 percent.
Against the actual, this is also lower than the 5.9 percent GDP growth of 5.9 percent for 2019 and 6.2 percent for 2018.
But the Philippines is not the only country in the whole Asia-Pacific region seen to experience slower growth this year due to the effects of COVID-19.
Among the emerging economies, China, India, Thailand, Malaysia, Vietnam, Macau, ri Lanka, Cambodia, Papua New Guinea, Laos, Mongolia, Maldives and Solomon Islands are all expected to experience a slowdown in their economies.
Among the advanced economies, Moody’s also revised lower its forecasts for Japan, South Korea, Taiwan, Singapore, Hong Kong and New Zealand.
“Our baseline scenario assumes declining consumption levels and continuing disruptions to production and supply chains in the first half of 2020, followed by a recovery in the second half of the year,” said Christian de Guzman, a Moody’s senior vice president.
“In the short run, this is playing out as both negative supply and demand shocks, and the longer the disruptions last, the greater the risk of a global recession,” De Guzman said.
He said rising infection rates would further impede global sentiment, heightening asset price volatility and tightening financing conditions, which could snowball into a deeper economic contraction.
Moody’s noted dampening of domestic consumption demand in affected countries exacerbates disruptions to supply chains and cross-border trade of goods and services.
“The longer the disruptions last, the greater the risk of global recession becomes. Risks skewed to the downside,” De Guzman said.
A period of lower oil prices, he said, will further weigh on the economic and fiscal fundamentals of oil exporters, while mitigating the trade shock for importers.
“Policy buffers are being tested. A number of governments and central banks have announced countervailing measures, including fiscal stimulus packages, policy rate cuts, and regulatory forbearance. However, the effectiveness of policy easing will be blunted by measures to contain the outbreak, and policy space is constrained for some sovereigns,” De Guzman said.
A number of governments have already announced measures to cope with the impact of the coronavirus, and Moody’s expects there will be more fiscal stimulus as the extent of the economic fallout becomes clearer.
“However, some governments — mainly frontier markets — may be constrained by their high indebtedness and limited access to funding,” De Guzman said.
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