MANILA - The Philippine economy could grow 5 to 6 percent this year driven by its strong fundamentals, the COVID-19 vaccine rollout, and election spending, economists said Wednesday, downplaying Fitch Ratings' negative outlook.
Economists from First Metro Investment Corp and the University of Asia and the Pacific said there were many things to be optimistic about the economy.
"Our economy remained resilient. The country has maintained its credit ratings and we continue to have a strong and healthy banking system, ample foreign reserves and adequate fiscal stamina. And now, we are seeing our economy switching from resilience to growth," said First Metro president Jose Patricio Dumlao said in a virtual briefing.
Remittances from overseas Filipinos grew 13 percent in April while the business process outsourcing industry, which has been swift in its pivot to remote work arrangements, is also seen to perform better, he said.
“As employment starts to pick up and more people get inoculated, consumer confidence is also expected to improve. The upcoming election next year is likewise anticipated to support growth,” he added.
The recent Fitch Ratings revision of the Philippines' credit rating outlook from stable to negative should be taken "constructively", he added.
"We actually look at it constructively. It is more of a reminder that the economic recovery requires hard work, more than a negative warning," he said.
University of Asia and the Pacific economist Vic Abola meanwhile said Fitch Ratings was also "giving a lot of weight" on the negative performance in the first quarter compared to other debt watchers S&P Global and Moody's Investor Service.
"Fitch has a record of seeing negatives in the Philippines. It is the only one amongst the ratings agencies which still retains BBB. The other two, S&P and Moody’s has BBB Plus," Abola said.
Employment has been improving as well as manufacturing, exports and capital goods imports, he added.
Despite these numbers, FMIC and UA&P's latest growth forecast however is lower than their earlier outlook of 5.5 to 6.5 percent.
The government meanwhile is targeting a growth rate of 6 to 7 percent , lower than the initial goal of 6.5 to 7.5 percent.