THE Philippines “will be okay” even if the government shifts its policies, Malacañang said on Tuesday, November 1.
Moody’s Investors Service recently cautioned the Philippines that its economic growth would be affected if the country made changes in its policies.
Reacting to the warning, Communications Secretary Martin Andanar pointed out that the Philippines’ economic fundamentals remain “strong.”
“The poverty rate had dropped. Inflation rate is stable. Government-private contracts continue to be honored,” he said, adding the economy will withstand policy shifts. “We will be okay.”
In its “Banking System Outlook–The Philippines” report, the credit watchdog stated that Philippines’ banking system will remain stable over the next 12 to 18 months.
“Profitability remains stable and the banks’ high loss-absorbing buffers will provide support for unexpected losses,” Alka Anbarasu,vice president and senior analyst at Moody’s, said.
Anbarasu added that the ample domestic liquidity will also support the banks’ funding profiles.
The report, released on Monday, October 31, also forecasted that the Philippines will achieve 6.5 percent real gross domestic product growth for 2016 and 2017.
“Asset quality will remain broadly stable, supported by stable macroeconomic factors, and the stable debt servicing metrics of borrowers,” Anbarasu said.
According to Moody’s, the country’s “strong domestic consumption” and an “increased pace of investments,” underpin the robust growth expectations.
“Business sentiment remains strong, banking sector credit growth will stay robust, and the economy has demonstrated resilience to global shocks,” the report added.
However, Moody’s warned that these growth prospects could be undermined, if there is a “significant shift in the government’s policies.”
The assessment was released a week after President Rodrigo Duterte announced that he is breaking away militarily and economically from the United States, the Philippines’ longtime ally.
The president later clarified that there would be no severing of diplomatic ties between the Philippines and the United States. However, an independent foreign policy will be pursued.
During his official state visit to Beijing in late October, Duterte also said that the Philippines will explore a more dependent relationship with China instead.