S&P upgraded Philippine credit rating

Philippines credit outlook upgraded to positive

Keisha Ta-Asan
PhilStar Global
27 November 2024

MANILA, Philippines — S&P Global Ratings has raised the Philippines’ credit rating outlook to positive from stable, increasing the possibility of an upgrade in the next 12 to 24 months.

In a report, the New York-based debt watcher affirmed its “BBB+” long-term investment grade rating and “A-2” short-term sovereign credit ratings on the Philippines.

“The positive outlook reflects our improved assessment of institutional and policy settings in the Philippines. This improvement could lead to stronger sovereign support over the next 12 to 24 months if the Philippine economy maintains its external strength, healthy growth rates and that fiscal performance will strengthen,” it said.

S&P said it might raise the Philippines’ ratings if current account deficits taper off and the government achieves faster fiscal consolidation.

On the other hand, the debt watcher could revise the outlook back to stable if economic growth momentum weakens or if the current account deficit becomes persistent and erodes the country’s external balance sheet.

However, S&P believes the Philippines has demonstrated strong economic recovery in the last two years.

“The ratings on the Philippines reflect the country’s above-average economic growth potential. This strength underpins constructive development outcomes. The ratings also benefit from the country’s strong external position,” it said.

The credit rating agency projects the Philippines’ gross domestic product (GDP) to grow by 5.5 percent this year before picking up to six percent in 2025, 6.2 percent in 2026 and 6.5 percent in 2027.

According to S&P, growth is expected to be supported by private consumption and improving external demand. GDP per capita could rise to about $4,119 this year and $4,478 in 2025.

“The country has a diversified economy with a strong record of high and stable growth. This reflects supportive policy dynamics and an improving investment climate,” it said.

Data from the local statistics agency showed GDP growth slowed to 5.2 percent in the third quarter from 6.4 percent in the previous quarter and six percent a year ago. From January to September, GDP expansion averaged 5.8 percent.

S&P also sees inflation at 3.3 percent this year, 3.1 percent in 2025, 3.2 percent in 2026 and three percent in 2027. All forecasts are within the two to four percent target of the Bangko Sentral ng Pilipinas (BSP).