Virgilio Lorenzo Jr

Fitch lowers Philippines outlook to negative over investment, energy risks

Article (news)

Arthur Fuentes

ABS-CBN News

MANILA  – Fitch Ratings on Monday downgraded the outlook for the Philippines&#x27; credit rating to &quot;negative&quot; from &quot;stable,&quot; citing global energy shocks and disruptions to public investment that threaten the archipelago’s post-pandemic recovery.While the agency affirmed the country’s Long-Term Foreign-Currency Issuer Default Rating at &#x27;BBB&#x27;—an investment-grade status—it warned of mounting headwinds for the Southeast Asian economy.&quot;The Outlook revision reflects rising risks to the Philippines&#x27; strong medium-term growth prospects from recent disruptions to public investment, exacerbated in the near-term by elevated exposure to the ongoing global energy shock,&quot; Fitch said in a statement.The agency noted that these challenges, combined with higher government debt and a &quot;gradual and sustained deterioration&quot; in external finances, could narrow the country’s growth outperformance compared to its peers.Despite the warning, Fitch projected GDP growth to remain robust at 4.6 percent in 2026. This baseline assumes a gradual recovery in public investment, even as high energy costs dampen household consumption.The Bangko Sentral ng Pilipinas (BSP) responded to the announcement by emphasizing the economy&#x27;s underlying resilience.“The economy remains in a good position because growth is strong and banks are in good shape,&quot; BSP Governor Eli Remolona, Jr. said. &quot;The BSP is closely monitoring the impact of higher oil prices and geopolitical developments, particularly the conflict in the Middle East, on inflation and the overall Philippine economy.”Remolona added that the central bank remains vigilant against the risk of &quot;de-anchoring inflation expectations&quot; and is prepared to act in a &quot;measured, timely, and data-driven manner.&quot;Fitch acknowledged the government&#x27;s proactive measures, including a National Energy Emergency declared in March, and noted that foreign exchange reserves—standing at $106.6 billion—remain adequate.While a negative outlook indicates a potential downgrade over the next one to two years, Fitch clarified that a &quot;revision in the outlook does not imply a rating change is inevitable.&quot;

Fitch Ratings downgraded the outlook for the Philippines' credit rating to "negative" from "stable," citing global energy shocks and disruptions to public investment.

Fitch Ratings downgraded the outlook for the Philippines' credit rating to "negative" from "stable," citing global energy shocks and disruptions to public investment.