MANILA, Philippines - The country’s economic growth is expected to decelerate to 5.5 percent this year as China’s slowdown and falling commodity prices drag down the region’s growth, Fitch Ratings said.
The projection is far below the government’s 6.5 to 7.5 percent growth target this year, and also slower than the credit rater’s forecast of a seven percent growth in 2013.
Economic growth, however, is seen to pick up to six percent in 2015, Fitch said but this level is still slower than the seven to eight percent target range set by the government for that year.
“Beyond the commencement of Fed (US Federal Reserve) tapering, which will lead to tighter global liquidity conditions, the domestic economic environment is becoming more challenging for emerging Asia,” Fitch said.
“Some of the key factors that could begin to restrain growth prospects, particularly in the ASEAN (Association of Southeast Asian Nations) region, include maturing credit cycles, slower growth in China and falling commodity prices,” the debt watcher continued.
Fitch explained that the slowing growth in China will likely hinder growth prospects for a number of economies in the region as trade activities dwindle down.
However, the credit rater pointed out countries engaged heavily in tourism services such as Thailand, Sri Lanka and Philippines, could benefit from China’s rising middle-income class.
At the same time, Fitch noted that increasing household debt may restrain further growth in private consumption that provides a boost to growth.
“Questions over the sustainability of growth in emerging Asia have surfaced following a difficult 2013 that was highlighted by pressures related to Fed tapering,” Fitch said.