Credit rating agency Fitch Ratings affirmed its earlier investment-grade credit rating of BBB with a negative outlook for the Philippines, citing the country’s strong growth, external finances and a credible economic policy framework.

“I remain optimistic as we expect more investments to enter the country due to the key structural reforms we passed during the pandemic years. Furthermore, our Medium-Term Fiscal Framework [MTFF], which aims to reduce the fiscal deficit, promote fiscal sustainability, and enable robust economic growth, will help us achieve this,” said Secretary Diokno.

While Fitch Ratings maintained its negative outlook on the country’s BBB rating in view of global headwinds, particularly higher interest rates, weaker external demand, and higher commodity prices, it projected that the Philippines will grow by 6.8 percent of gross domestic product (GDP) in 2022.

In its latest report dated October 27, 2022, the positive growth is seen to be driven by strong domestic demand upon the reopening of the economy and normalization of activities. Output growth is expected to surpass pre-pandemic levels in the second half of this year.

The 6.8-percent projection is within the government’s target band of 6.5 to 7.5 percent, and exceeds economic projections made by the International Monetary Fund (IMF), World Bank (WB), and Asian Development Bank (ADB).

Fitch projects that the higher private investments that the Philippine government is targeting would be able to yield growth dividends. Furthermore, the credit rater cited strong medium-term growth and continued compliance to sound macroeconomic policies to be potential factors that could lead to a rating upgrade.

Under the MTFF, the Marcos administration is pushing for the passage of remaining tax reform packages – the Real Property Valuation Reform bill and the Passive Income and Financial Intermediary Taxation bill – and is working closely with the private sector to drive economic transformation.

###