Amidst global economic uncertainties, international ratings agency Standard & Poors (S&P) has joined other agencies and analysts in projecting lower growth rates for the Philippines.

It further downscaled its growth expectations for the Philippines to as low as 3.8 percent this year and 3.3 percent in 2009.

In its latest "Asia-Pacific Markets Outlook 2009," S&P said the specific outlook for the Philippines was not as good as it last projected in August when the credit rating agency said it expected the economy to grow by 5.6 percent this year and by 5.5 percent in 2009.

The downgrade puts the Philippines in the same fate as the rest of the Asia Pacific countries, which now have to face detriorating financial markets and worsened global economic outlook. It also noted mature economies, like that of Japan and Singapore to "likely experience quarters of negative GDP (gross domestic product) growth."

Nonetheless, S&P's Asia-Pacific Chief Economist, Subir Gokarn, said regional growth drivers such as strong domestic demand in China and India and the supportive monetary policy stances of the region's governments would enable most economies to experience positive, albeit slowing, growth in 2009.

China and India

S&P said in its regional report that the ongoing market dislocation was expected to "significantly impact" Asia-Pacific in 2009 but factors such as intraregional trade, supportive policymaking, and still-robust forecasts for China and India would help the region navigate the global storm.

"Put simply, Asia-Pacific is expected to be able to roll with the punches," Gokarn said.

"By the standards of 2006 and 2007, 2009 will not be an outstanding year by any means, but it will reflect the region's resilience and collective ability to moderate fluctuations around a strong growth trend rate," added Gokarn.

Inflation rate

For the Philippines, S&P also revised its projected inflation rate, which the agency said would average between 8.8 percent and 8.9 percent this year before softening in 2009 to bring the projected range down to between 5 and 5.5 percent.

S&P had previously projected the inflation rate to stay within the 7.8 percent and 8.3 percent range this year, slowing down to the 6 percent and 6.5 percent range by 2009.

In contrast, the Bangko Sentral ng Pilipinas had pegged its projected inflation rate at between 9 to 11 percent this year and 6 to 8 percent in 2009.

Rebound in 2009

According to S&P equity research director Lorraine Tan, Asia-Pacific markets were likely to rebound in 2009 because markets were already in the process of bottoming out.

"Although the economic and corporate news is likely to remain negative-and uncertainty still pervades the global financial system-we see that markets will have retraced in line with, and in some cases exceeded, movements in previous bear markets in terms of both value and time frame," said Tan.

S&P also cautioned that as markets and economies struggled to regain their balance, there was a need for authorities to reach a similarly balanced and sustainable approach to financial sector reforms as policymakers try to restore confidence to the marketplace.

"Neither unfettered nor over-regulated markets will meet the needs of our ever-growing and maturing regional economy," said Tom Schiller, S&P's Executive Managing and Head of Asia-Pacific.

"The success of future financial-sector reform lies in finding a sustainable balance between the two," Schiller said, echoing the spreading fears that monetary and finance officials would overreact to the on-going crisis by restoring regulations tended to stifle market development.