More signs of economic growth in the Philippines have been seen recently which was influenced by the country’s second investment grade rating upgrade.
After a little over a month of getting its first investment grade from Fitch Ratings, the Philippines received another upgrade from the Standard & Poor’s (S&P) Ratings Services.
S&P raised the country’s credit rating from BB+ to BBB-, the minimum investment grade that a country can get.
S&P, like the Fitch Ratings, cited the country’s favourable macroeconomic fundamentals in their decisions, including rising foreign-exchange reserves, declining debt burden of the government, non-threatening inflation, strong economic growth rate and stable banking system.
“The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government’s declining reliance on foreign currency debt,” S&P credit analyst Agost Bernard said in a statement.
An investment grade means the Philippines can borrow funds at a lower cost, allowing the government to save. It also shows that the country is a suitable place for investors to do business.
With this, more positive news in the country’s economy was seen as the Philippine peso strengthened and the Philippine Stock Exchange Index (PSEi) reached its record high.
The local currency closed on Friday at 40.91 per dollar, the highest in a month.
While the PSEi also closed a new record high of 7,215.35, it’s first time above the 7,200 mark and the 27th time this year.
The upgrade became a turn-on to stock market traders, and they expect the peso to stay as one of the most expensive Asian currencies this year.
Meanwhile, alongside with the good news of S&P’s investment grade rating upgrade, the Social Weather Station (SWS), a local survey firm reported the country’s increasing unemployment rate to 25.4 percent in the first quarter of the year from the 24.6 percent in December 2012.
SWS conducted a survey from March 19 to 22 that showed Filipino adults without jobs rose to 11.1 million, up by ten percent from the 10.1 million recorded at the end of 2012.
Economist explained the ironic relation that the Gross Domestic Product (GDP) growth of the country cannot generate employment, and that the benefits of a strong economic growth have not spilled over to the people, thus results to jobless growth.
