MANILA — Fitch Ratings has affirmed the Philippines’ 'BBB' investment-grade credit rating and kept its stable outlook.

The credit ratings agency said this reflects the country's strong medium-term growth, which supports a gradual reduction in government debt/GDP over the medium term.

A 'BBB' rating means a low risk of default and adequate capacity to pay, although some unfavorable economic conditions could constrain this capacity.

A "stable" outlook, meanwhile, suggests a low likelihood of a rating change over the next one to two years.

Fitch said it expected the Philippine economy to grow by 5.8 percent in 2024. 

"Droughts associated with the El Niño phenomenon are affecting agricultural production and electricity and water supply across parts of the country, while heavy rainfall expected during La Niña later this year also poses risks to economic activity," Fitch said.

But it said real GDP growth could exceed 6 percent in the medium term, because of large investments in infrastructure and reforms to foster trade and investment.

The Philippine economy grew 5.7 percent in the first quarter of 2024. Economic managers see the economy expanding 6 to 7 percent for the entire 2024.

Fitch also said it sees inflation staying at 3.8 percent in 2024 — near the top end of the government's target. Inflation climbed to 3.9 percent in May.

But it noted that inflation may moderate to 3.4 percent in 2025 on lower commodity prices, base effects, and the gradual pass-through of 450bp of rate hikes since May 2022.

It said it expected general government debt/GDP to stay at 54 percent of GDP by 2025.

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Finance Secretary Ralph Recto, Budget Secretary Amenah Pangandaman, and Bangko Sentral Governor Eli Remolona welcomed the Fitch rating.

“This affirmation is highly encouraging as it shows a strong vote of confidence in our ability to grow the Philippine economy in a higher path over the medium term,” Recto said. 

“Any rating affirmation or upgrade is a major win for all Filipinos as this means that the Philippines can have more access to cheaper financing from global capital markets,” he added.

Pangandaman said the Department of Budget and Management would speed up the implementation of the government’s reform agenda to ensure that government spending would yield higher productivity and contribute to the country’s growth story.

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