Diokno says credit raters unbothered by PH recession

Bangko Sentral ng Pilipinas Governor Benjamin Diokno confidently claimed that the Philippines is unlikely to see a credit rating downgrade despite the country plunging into recession after its biggest quarterly contraction.

Following a 0.7 percent decline in the first quarter, the local economy shrank 16.5% in April to May owing to the coronavirus outbreak which has ravaged businesses and displaced workers.

“Highly unlikely. From January to June, the rating agencies (Fitch, Moody’s and S&P) have downgraded 82 sovereigns, revised to negative outlooks 104 sovereigns. The Philippines is not one of them. The ratings agencies have affirmed the RP’s investment grade ratings and outlook,” Diokno said.

“The sharp fall in Q2 GDP does not pose a danger to the Philippines’ strong macroeconomic fundamentals… The economic managers view the economy’s plunge in the second quarter as temporary resulting from the strict and comprehensive lockdown during the period owing to the coronavirus pandemic,” he added.

During the inter-agency Development Budget Coordination Committee meeting last July 28, the economic managers revised the government’s GDP target from a 2-3.4 percent contraction to a 5.5 percent drop while next year’s target was revised from growth of 8-9 percent to 6.5-7.5 percent.

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