Investment grade rating may come soon
MANILA, Philippines - Bank of the Philippine Islands says the Philippines may soon get an investment grade rating after proving it can sustain growth of about 6%.
The government said second quarter growth was 5.9% after a 6.3% expansion in the first quarter.
"Now that we've been able to prove we can grow more than 5% for two consecutive quarters and pass legislation like sin taxes, I think we can get another upgrade from another major rating agency," BPI chief economist Jun Neri told ANC's Business Nightly.
Neri said the Philippines is no longer a jeepney economy that overheats every 6 or 7 years. He noted the economy's previous overheating was the result of the country's dependence on foreign debt and capital.
He said remittances and other factors mean the Philippines has its own fuel and is much less vulnerable to external constraints.
"Even at 4% people were saying 'no more cuts beyond that' but that's if you think jeepney economy where you would say enough is enough, more than 6% growth is too fast for the Philippines, but if we are convinced we're actually a sports car, you can handle faster growth rates without overheating," he said.
Still Neri said the government may need to temper the rise of peso, which has made imports so cheap that manufacturing, jobs and spending could be hurt.
"What we're worried more about is agriculture and related sectors of manufacturing. These days imports are very cheap partly because of the strong peso. As a result of not being able to compete better with imports, we aren't able to generate jobs and outoput in these sectors. That's an area of concern that could be a source of slowdown in third and fourth quarters," he said. - ANC