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Moody’s Warns Philippines of Downside Risk

Moody’s Warns Philippines of Downside RiskMoody’s Warns Philippines of Downside Risk

Debt watcher Moody’s Investors Service on Friday said the Philippines’ planned shift to a federal form of government could be a downside risk for the economy, especially on the country’s fiscal position, PNA reported. Moody’s nonetheless kept its Baa2 credit rating for the Philippines, one notch above the minimum investment grade, with a stable outlook. “Moody’s expects that growth will remain robust and that the Philippines’ fiscal metrics will strengthen somewhat as the government continues to make progress on its socioeconomic reform agenda, but these trends are likely to fall short of bringing the Philippines’ credit profile in line with higher-rated countries,” it said in a statement. However, “policymakers face challenges in managing the current inflationary pressures,” Moody’s said. In the first half of the year, headline inflation averaged 4.3%, above the government’s full-year target range of 2-4%. The Bangko Sentral ng Pilipinas’ policymaking Monetary Board already raised the key interest or policy rate to 3.5% or by 25 basis points each in May and June following higher-than-expected rate of increase in the prices of basic goods.

 

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