Fitch affirms PH credit rating of ‘BBB’

By Joann Villanueva

November 11, 2023, 8:53 pm

<p>Ninoy Aquino International Airport Terminal 3 <em>(PNA file photo by Avito C. Dalan)</em></p>

Ninoy Aquino International Airport Terminal 3 (PNA file photo by Avito C. Dalan)

MANILA –Fitch Ratings kept the Philippines’ investment grade rating at “BBB” after noting the economy’s strong medium-term growth prospects, declining liabilities, macroeconomic stability, and sound economic rules.

Fitch forecasts growth, as measured by gross domestic product (GDP), to average above 6 percent in the medium term, as stated in the report released Friday.

For the third quarter this year, GDP exceeded expectations after expanding by 5.9 percent from 4.3 percent in the previous three months.

This brought the average growth in the first three quarters this year to 5.5 percent, below economic managers’ 6 percent to 7 percent growth assumption for this year.

"The Marcos administration, in office since June 2022, has continued with structural economic reforms, passing a new law streamlining PPP (public-private partnerships) processes in September 2023, which could help catalyze private investment to address the Philippines' large infrastructure gaps. This follows the foreign investment act and public service act passed in 2022, which opened up more areas of the economy to foreign and private investment," Fitch Ratings stated.

Fitch Ratings also cited the Bangko Sentral ng Pilipinas’ (BSP) inflation-targeting framework and the foreign exchange policies as “credible,” noting the total of 450 basis points hike in the central bank’s key rates since 2022 to address the acceleration of domestic inflation rate beyond the government’s 2 percent to 4 percent target band.

Domestic inflation rate slowed to 4.9 percent in October after accelerating in the last two months and rising to 6.1 percent in September.

Fitch Ratings forecasts domestic inflation to slow to 3.5 percent by 2025.

“We welcome Fitch’s recognition of the work being done by the central bank to bring inflation back to within the target range. The BSP will remain data dependent in managing inflation expectations in an effort to avoid the second-round effects of supply shocks,” BSP Governor Eli Remolona Jr. said in a statement on Saturday.

The Philippines has been rated "BBB" since December 2017. (PNA)