S&P hikes 2021 growth forecast for PH, but not without Omicron warning

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Metro Manila (CNN Philippines, December 1) — S&P Global Ratings has turned more optimistic toward the Philippines’ economic performance this year as it raised its growth forecast for the country.

“We mark growth in the Philippines higher at 5.0% in 2021 compared with our forecast of 4.3% earlier,” said the global credit rater in its recent note.

It particularly cited how economic growth in the third quarter reached 7.1%, effectively surpassing expectations.

The newest prospect is exactly the higher end of the economic managers’ 4-5% target band for 2021, its second downward adjustment for the year.

With 2021’s projected stronger base, S&P dialed down its growth projection for the Philippines for 2022 from 7.7% to 7.4%. The figure is still within the economic team’s 7-9% growth goalposts for next year.

Still, the New York-based rating agency warned about the risks posed by new coronavirus variants as the pandemic lingers.

“Just as Asia-Pacific was learning to live with the virus, the new omicron variant is already disrupting economic reopening,” said S&P.

It noted the uncertainty surrounding the recently discovered variant’s transmissibility and severity along with the efficacy of current COVID-19 vaccines against it.

Markets are expected to adopt a precautionary stance, S&P further said, adding that governments are likewise seen to impose short-term containment measures.

“Nevertheless, we believe this shows that, once again, more coordinated, and decisive efforts are needed to vaccinate the world's population to prevent the emergence of new, more dangerous variants,” it stated.

S&P kept its annual growth forecast for the Asia-Pacific region unchanged at 6.7%.