MANILA — Fitch Ratings is confident that the Philippine economy will remain among the strongest in the region this year with a growth of 6.1 percent as recovery is seen in the second half of the year.

In a report on the APAC Sovereign Credit Review for the third quarter, the debt rater said the country, which has an investment grade rating of ‘BBB’ with Stable outlook, Fitch Ratings said the below-target output in the first half of the year is projected to improve in the remaining quarters.

“The agency is maintaining its full-year 2019 growth forecast of 6.1 percent, continuing to place the Philippines among the region’s fastest growing economies,” it said Tuesday.

In the first half of the year, growth, as measured by gross domestic product (GDP) expanded by an average of 5.5 percent, lower than the government’s 6 to 7 percent full year target.

The weak output was attributed to the impact of the delay in the approval of this year’s national budget and the weak external environment.

The negative external front is seen to hamper domestic expansion in the next two years, with growth projected to be around 6.3 percent.

Fitch Ratings also noted that overheating risks have subsided after the total of 175 basis points increase in the Bangko Sentral ng Pilipinas’ (BSP) key policy rates last year.

The rate hikes were done to help manage inflation expectations since inflation was on the rise due to supply-side factors.

Inflation peaked at 6.7 percent in September and October last year, exceeding the government’s 2 to 4 percent target band.

Since then, inflation has decelerated and slowed to 1.7 percent last August.

Fitch Ratings projects inflation to average at 3.1 percent this year, within the government’s 2 to 4 percent target band until 2021. (PNA)