Fitch affirms Philippines' BBB rating, outlook stable

By Ovunc Kutlu

ISTANBUL (AA) - Fitch Ratings said Friday it affirmed the Philippines' long-term foreign-currency issuer default rating at BBB with a stable outlook.

The rating and outlook reflect the country's strong medium-term growth, which supports a gradual reduction in the government debt/GDP ratio in the medium term, according to the rating agency.

Fitch said it forecasts the Philippines' real GDP to grow above 6% in the medium term, while the general government deficit is expected to narrow to 3.8% of GDP by 2025, after 5% in 2023 and 5.4% in 2022.

The Philippines' economy is estimated to expand 5.8% in 2024, after 5.5% in 2023 and 7.6% in 2022, according to the agency.

"The slowdown in 2023 was driven primarily by weaker private consumption, with the post-Covid pandemic boost fading and high inflation - particularly food - weighing on real incomes," it said in a statement.

"Droughts associated with the El Niño phenomenon are affecting agricultural production and electricity and water supply across parts of the country, while heavy rainfall expected during La Niña later this year also poses risks to economic activity," it added.

The agency noted that the Philippines' rating could lead to a downgrade if there is reduced confidence in strong and stable medium-term economic growth, failure to maintain a stable government debt/GDP ratio and significant deterioration in foreign-currency reserves and the country's net external debt position.