Moody's downgrades PH growth forecast to 2.5% amid pandemic

Moody's Investors Service has downgraded its Philippine economic growth forecast for 2020 to 2.5 percent due to the adverse effects of the coronavirus pandemic.

This projection is attributed to the curtailed domestic demand caused by the extended enhanced community quarantine in Luzon and the broader global downturn affecting trade, investment, and tourism.

Moody's notes that the Philippines' GDP growth is expected to remain robust compared to its regional peers, highlighting the country's favorable demographics, moderate government debt, improving debt affordability, and a stable banking system.

However, the pandemic will challenge these positive trends, potentially leading to lower government revenues and increased borrowings.

Moody's projects a rise in the general government debt burden to around 44 percent of GDP in the coming years due to lower growth and fiscal stimulus.

The agency also pointed to the Philippines' low per capita incomes, weaker government revenue mobilization, and institutional challenges like the weak rule of law and corruption as factors weighing on its economic outlook.