The Philippines has received a significant vote of confidence in its economic management as Fitch Ratings reaffirmed the country’s “BBB” credit rating with a “stable” outlook. (A ‘BBB’ rating indicates that expectations of default risk are currently low. It also means that the country’s current capacity for payment of financial commitments is considered adequate. Moreover, an assignment of a “stable” outlook means Fitch is not likely to change its rating over a one- to two-year period.)
This positive assessment, announced on Tuesday, April 29, underscores the nation’s success in keeping inflation manageable and maintaining overall macroeconomic stability.
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona Jr. warmly welcomed Fitch’s decision, emphasizing the central bank’s unwavering commitment to its dual mandate. “The BSP took actions to help keep inflation manageable and promote sustainable economic growth. The BSP will continue to do so,” he stated.
Fitch praises BSP’s inflation management, projects steady economic growth
Fitch’s affirmation highlights the effectiveness of the BSP’s inflation targeting framework, which it deems “credible.” The credit rating agency projects inflation to remain comfortably within the government’s 2 to 4 percent target range, hovering around 2 percent for both 2025 and 2026.
This aligns with the latest data from the Philippine Statistics Authority, which showed inflation easing to 1.8 percent year-on-year in March, bringing the year-to-date average to 2.2 percent for the first three months of 2025.
Beyond inflation management, Fitch also acknowledged the Philippines’ “solid domestically driven growth.” The economy expanded by 5.3 percent in the fourth quarter of 2024, culminating in a full-year growth of 5.7 percent.
While this fell slightly short of the government’s revised target of 6 to 6.5 percent, Fitch anticipates a growth of 5.6 percent in 2025. This growth is expected to be fueled by robust infrastructure spending, a thriving services export sector, and consistent remittance-backed private consumption.
Looking ahead, Fitch projects a steady medium-term growth rate of 6.0 percent for the Philippine economy.
Domestic focus shields economy from global issues; low US tariffs offer edge
Governor Remolona echoed this optimistic outlook, emphasizing the BSP’s dedication to fostering an environment conducive to sustained economic expansion. The central bank anticipates the release of the first-quarter 2025 GDP data on May 7, which will provide further insights into the current economic trajectory.
A key factor bolstering the Philippines’ economic resilience, according to Fitch, is its domestic focus, which mitigates its exposure to the volatility of global trade tensions. Furthermore, the relatively low US tariffs on Philippine exports could provide a competitive edge over its regional counterparts, further strengthening its economic position.
The positive assessment from Fitch aligns with recent affirmations from other prominent credit rating agencies. In November 2024, S&P Global Ratings revised the Philippines’ outlook to positive, signaling a potential future upgrade.
Prior to that, in August 2024, Japan-based Rating and Investment Information, Inc. (R&I) upgraded the country’s credit rating to “A-” with a stable outlook, further solidifying the Philippines’ standing among investment-grade economies.
Low credit risk affirms easier access to affordable international financing
The maintenance of an investment-grade credit rating is crucial for the Philippines as it signifies a low level of credit risk. This translates to easier access to more affordable funding in the international markets, allowing the government to allocate greater resources towards vital social programs and crucial development initiatives.
This improved financial flexibility can further propel the country’s growth trajectory and enhance the well-being of its citizens.
In the end, Fitch Ratings’ reaffirmation of the Philippines’ “BBB” rating with a “stable” outlook serves as a testament to the country’s effective macroeconomic management, particularly in controlling inflation and fostering a resilient, domestically-driven economy.
With the BSP’s commitment to continued vigilance and supportive policies, the Philippines is poised to navigate future economic challenges and pursue a path of sustainable and inclusive growth.
