The Philippine economy is likely to outperform its Asian peers this year, with a projected growth of 3.3 percent amid the global downturn, international ratings agency Moody's said Tuesday.
Moody's Economy.com, a division of Moody's Analytics, said the country would be well within its target growth range despite its relatively slow pace in recent years, with consumer spending as one of the economy's strongest drivers.
The country, Moody's said, would be in a better position compared to its Asian neighbors such as Singapore, which is projected to suffer a 4.4-percent contraction from its 1.2-percent expansion last year.
"This year will probably be the most interesting for Southeast Asia since the Asian financial crisis. We expect tradition to turn its head and ASEAN (Association of South East Asian Nations) members to undergo a role reversal," Moody's associate economist Nikhilesh Bhattacharyya said.
The only economy seen to outdo the country is Indonesia, whose growth was estimated at 3.9 percent, according to Moody's. All other economies are perceived to experience slow growth which won't keep pace with the expanding labor force, leading to higher unemployment.
"Indonesia and the Philippines, traditionally less stable, will slow, but chances of recession are low," Bhattacharyya said.
However, Moody's has downgraded its outlook for Philippine banks from stable to negative, saying that the expected slowdown would drag the asset quality and earnings of the country's banking industry. The ratings agency sees a similar scenario for banks in Australia, Hong Kong, Taiwan, Mongolia and Cambodia.
"While the direct impact of the current global financial crisis on banks in Asia Pacific has been comparatively limited, these changes in the industry outlook reflect expectations that gathering economic headwinds from a global recession will increasingly test the resilience and strength of regional banking industries," said Jerry Chien, Managing Director for Moody's Financial Institutions Group in Asia Pacific.
The shift in Moody's central macroeconomic scenario, Chien said, pointed to a more challenging operating environment for banks over the next 12 to 18 months, with a pronounced deceleration in growth and trade as the most significant threat to their creditworthiness.
"In terms of the macroeconomic outlook, Moody's central scenario for 2009-2010 has shifted to one of Global Healing,' and in which the process of global de-leveraging and tight financial conditions depress emerging markets to below-trend growth and leads to economic stagnation," he said.