Philippines Retains ‘BBB’ Credit Rating with Stable Outlook, Says Fitch

Fitch Ratings has reaffirmed the Philippines’ ‘BBB’ credit rating with a stable outlook, a status held since December 2017. This reflects the country’s strong economic fundamentals.

Fitch’s decision is based on the Philippines’ medium-term growth potential, stable debt levels, sound macroeconomic policies, and effective inflation control by the Bangko Sentral ng Pilipinas (BSP).

Since May 2022, the BSP has increased its policy rate by 450 basis points to 6.5% to manage inflation, targeting a range of 2.0% to 4.0%.

Recent data from the Philippine Statistics Authority (PSA) shows headline inflation at 3.9% in May 2024, slightly up from 3.8% in April. The January to May 2024 average is 3.5%, down from 6.1% in May 2023. Fitch forecasts inflation to ease to 3.8% in 2024 and 3.4% in 2025.

Fitch projects the Philippines’ real GDP to grow by 5.8% in 2024, driven by infrastructure investments and trade reforms, with growth expected to exceed 6.0% over the medium term.

Meanwhile, the first quarter of 2024 saw a 5.7% year-on-year economic growth.

Fitch also expects government debt to remain stable at 54% of GDP by 2025 and the current account deficit to narrow to below 2.0% of GDP by 2025.

This ‘BBB’ rating signifies reduced credit risk, enabling cheaper borrowing and signaling reliable financial commitments. (ASC)