Manila – Fitch Ratings has affirmed the Philippines’ investment grade credit rating at ‘BBB’, reflecting the nation’s robust medium-term growth prospects and macroeconomic stability. This decision was influenced by the country’s declining liabilities and effective economic governance.
According to Philippines News Agency, the agency expects the Philippines’ gross domestic product (GDP) to average above 6 percent in the medium term. The report, released last Friday, highlights the country’s economic performance in the third quarter of this year, showing a GDP growth of 5.9 percent, exceeding the 4.3 percent growth in the previous quarter. Despite this, the average growth rate in the first three quarters of the year stood at 5.5 percent, marginally below the 6 to 7 percent growth target set by economic managers for this year.
The Marcos administration, which came into power in June 2022, has been recognized for continuing structural economic reforms. Fitch Ratings noted the administration’s recent passing of a law in September 2023 that streamlined public-private partnership (PPP) processes, potentially boosting private investment in the Philippines’ significant infrastructure sector. This follows the foreign investment act and public service act passed in 2022, which opened more areas of the economy to foreign and private investment. Additionally, Fitch Ratings lauded the Bangko Sentral ng Pilipinas’ (BSP) inflation-targeting framework and foreign exchange policies as credible. The central bank has raised its key rates by a total of 450 basis points since 2022 to tackle the acceleration of the domestic inflation rate, which exceeded the government’s target range of 2 to 4 percent.
Domestic inflation, which peaked at 6.1 percent in September, slowed down to 4.9 percent in October. Fitch Ratings forecasts that the domestic inflation rate will further decrease to 3.5 percent by 2025. BSP Governor Eli Remolona Jr. welcomed Fitch’s recognition of the central bank’s efforts to control inflation, assuring continued data-dependent management of inflation expectations to mitigate the impact of supply shocks. The Philippines has held its “BBB” rating since December 2017.