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The Philippines maintained its investment-grade credit rating from London-based Fitch Ratings due to strong medium-term growth prospects despite some structural weaknesses.
In a statement, Fitch Ratings said on Tuesday, April 29, that it affirmed the Philippines' long-term foreign-currency issuer default rating at 'BBB' with a “stable” outlook.
Fitch said the rating is anchored on the Philippines' robust medium-term economic expansion, which is expected to facilitate a gradual decrease in the government's debt-to-GDP ratio, and the substantial size of its economy in comparison to its 'BBB' rated peers.
Fitch said the Philippine economy is projected to grow by 5.6 percent in 2025, driven by public infrastructure investments, services exports, and private consumption supported by remittances.
Fitch Ratings added that easing inflation and interest rates should further bolster private demand.
However, the agency noted that domestic political uncertainty could dampen investment, while global trade tensions are likely to exert downward pressure on growth, particularly through weaker global demand.
Fitch Ratings stated that the Philippines has limited direct exposure to global trade tensions, as its goods exports accounted for only about 12 percent of gross domestic product (GDP) in 2024.
The majority of these exports consisted of electronics and machinery, with over 16 percent destined for the United States.
The agency suggested that if the reciprocal tariffs announced by the US in April take effect, the Philippines' relatively low applicable tariff rate of 17 percent could provide an advantage compared to regional competitors.
Furthermore, Fitch noted that the Philippines' terms of trade could benefit from lower commodity prices or a diversion of Chinese exports.
The agency anticipates that real GDP growth will accelerate to over six percent in the medium term, more than double the projected 'BBB' median and broadly in line with the Philippines' growth trajectory in the decade preceding the Covid-19 pandemic.
