Debt-watcher S&P Global Ratings (S&P) has revised the Philippines' credit rating outlook to "positive" from "stable," citing the country's strong economic performance and effective policymaking.
S&P said the improved outlook reflects the Philippines' "effective policymaking, fiscal reforms, improved infrastructure and policy environment that have helped keep economic growth strong in the past decade."
The recent passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) and Public Private Partnership (PPP) laws were also cited as contributing factors.
S&P kept the sovereign credit ratings at “BBB+" for long-term and “A-2” for short-term. An improved rating or outlook helps the government borrow at lower interest rates, allowing it to fund more services and infrastructure. This also helps businesses borrow at lower rates, helping fund expansion and job creation.
S&P, meanwhile, expects the Philippine economy to grow by 5.5 percent in 2024.
In the third quarter of 2024, the Philippine Statistics Authority reported a 5.2 percent year-on-year gross domestic product (GDP) growth, bringing the average for the first three quarters to 5.8 percent.
This makes the Philippines one of the fastest-growing economies in Asia, behind Vietnam (7.4 percent) and ahead of Indonesia (4.9 percent), China (4.6 percent), and Singapore (4.1 percent).
S&P also noted the recent slowdown in inflation, with prices rising by only 3.4 percent in the first nine months of 2024, down from 6.0 percent in the previous year.
As of end-October 2024, the country’s gross international reserves rose to $111.1 billion, enough to cover eight months’ worth of imports, well above the three-month benchmark suggested by the International Monetary Fund.
S&P raised the Philippines’ rating to its current level in 2019, BBB- in 2013, and BBB in 2014.
The next level is A-, the entry point to A ratings. Moody’s and Fitch rate the Philippines Baa2 and BBB, which are one level below the S&P rating.