FITCH Ratings has affirmed the Philippines’ credit rating of ‘BBB’ and raised its outlook to ‘stable’ from ‘negative’.
The ratings agency in a report said revision of the outlook to ‘stable’ reflects Fitch’s improved confidence in the Philippines’ return to strong medium-term growth after the COVID-19 pandemic, sustained reductions in the country’s debt-to-GDP ratio and the country’s sound economic policy framework.
“Fitch’s latest rating action reflects the strong economic activity which can be fostered by the improved investment climate in the country. The country’s growth is further supported by the steady improvement of our labor and employment conditions,” finance secretary Benjamin Diokno said in a statement.
A rating of ‘BBB’ sits above the minimum investment grade and suggests that expectations of default risk are low.
It also indicates the ability of the country to meet its financial commitments.
A sovereign investment-grade rating signals a country’s creditworthiness and allows it to access funding from development partners and international capital markets at lower cost.
Fitch forecasts that the Philippines’ real GDP growth will reach above six percent over the medium term, higher than the median ‘BBB’ growth rate of three percent.
“The improved outlook for the Philippines to ‘stable’ is a testament to the country’s robust macroeconomic fundamentals, as evidenced by the economy’s strong growth performance in 2022 at 7.6 percent and 6.4 percent in the first quarter of 2023,” Diokno said.
