Fitch upgrades PH outlook to ‘stable,’ affirms ‘BBB’ credit rating

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Metro Manila (CNN Philippines, May 22) – Credit watcher Fitch Ratings upgraded its outlook for the Philippines from negative to stable thanks to improving confidence on the country’s return to a strong medium-term growth following the COVID-19 pandemic.

“The revision of the outlook to stable reflects Fitch's improved confidence that the Philippines is returning to strong medium-term growth after the COVID-19 pandemic, supporting sustained reductions in government debt/GDP [gross domestic product], after substantial increases in recent years,” Fitch said Monday.

“The revision also reflects our assessment that the Philippines' economic policy framework remains sound and in line with 'BBB' peers, despite its low scores on World Bank Governance indicators,” it added.

Fitch forecast that the country would hit a growth of above 6% in the medium term, which it says is considerably stronger than the median 3% growth under the ‘BBB’ rating.

It noted both the Philippines' higher growth rate of 7.6% in 2022, the strongest since 1976, and that growth warmed to 6.6% in the first quarter of 2023.

Fitch also predicted that general government deficit would narrow down to 2.8% of the GDP in 2023 and 2024, “from an estimated 3.3% of GDP in 2022 and 4.6% of GDP in 2021.”

Furthermore, the creditors projected deficit to GDP would decline to 52% by 2024, after it crawled up to 54% last year.

However, Fitch pointed out that the country’s outlook and ratings were constrained by “weak scores on the World Bank Governance Indicators,” specifically in political stability and rule of law.