Tokyo-based Japan Credit Rating Agency Ltd. (JCR) maintained the Philippines’ credit rating at “A-” with a stable outlook as the debt watcher projects that the domestic economy will return to “high growth” rates, with initial signs of recovery surfacing in the second half of 2026.

Despite Philippine economic expansion slumping to a post-pandemic low of 2.6 percent in the first half due to high consumer prices and public construction delays, JCR still expects growth to rebound in the second half on the back of resumed spending and tamer inflation.

According to JCR, a stronger macroeconomic performance is on the horizon, with the agency projecting inflation-adjusted gross domestic product (GDP) growth to recover from July to December.

Local growth is expected to average around 3.5 percent, buoyed by the “recovery in public infrastructure investment and the effects of price stabilization policies.”

This projected turnaround follows a challenging first half of the year, during which unpredictable geopolitical headwinds and state spending bottlenecks stalled output expansion. Economic growth averaged 2.6 percent in the first half, marking a post-pandemic low.

Data showed the slowdown was driven by sluggish public investments and muted household consumption. Exacerbating this was inflation, which averaged 4.8 percent in the same period due to spikes in oil and food prices amid the ongoing war between the United States (US) and Iran.

Even with these pressures, JCR remains optimistic about the Philippines’ structural resilience and ongoing economic reforms. Beyond 2026, JCR is betting on improvements in the investment climate, propped up by the state’s efforts.

“JCR believes that, as the government works to improve the investment environment and advance industrial upgrading, the economy will return to high growth rates over the medium term,” it said in a rating action statement published Friday, Aug. 28.

This positive medium-term outlook is banking on the government’s commitment to restoring fiscal discipline.

To anchor investor confidence, the Marcos Jr. administration aims to lower the fiscal deficit-to-GDP ratio to 3.5 percent and the central government debt-to-GDP ratio to 63.1 percent by 2030 by streamlining government spending and pursuing major tax overhauls.

Achieving these milestones will require navigating a slower fiscal consolidation path in the near term due to recent delays in public works and elevated commodity prices.

As of end-2025, the national government’s (NG) debt ratio stood at 62.2 percent. While historically this was close to record highs, JCR noted that this level is relatively low compared with sovereigns rated in the “A” range.

JCR said the government debt-to-GDP ratio is expected to remain in the mid-60-percent range for some time before gradually declining toward the administration’s long-term targets.

Finance Secretary Frederick D. Go said the Japanese debt watcher’s nod to the country’s investment-grade rating and stable outlook “reflects the resilience of our economy and the government’s commitment to fiscal consolidation and long-term reforms.”

“It reinforces investor confidence and supports our efforts to attract investments, create quality jobs, and sustain inclusive growth,” Go further said.

Further, the Bangko Sentral ng Pilipinas (BSP) also welcomed the credit rating affirmation, saying this “reflects continued confidence in the country’s sound fundamentals amid external headwinds,” particularly the heightened uncertainty, including the Middle East conflict.

“For its part, the BSP will continue to promote price stability, safeguard financial stability, and ensure safe and efficient payments and settlements,” the central bank said. “These efforts support sustainable growth and broader economic opportunities for Filipinos.”