S&P upgrades Philippines credit rating

MANILA, Philippines — S&P Global Ratings upgraded the credit rating of the Philippines to two notches above minimum investment grade on the back of the country’s above-average economic growth, healthy external position, and sustainable public finances.

In a statement, the debt watcher said it upgraded the Philippines’ long-term rating to BBB+ from BBB to reflect the country’s strong economic growth trajectory that is expected to continue to drive constructive development outcomes and underpin broader credit metrics over the medium term.

“The rating is also supported by solid government fiscal accounts, low public indebtedness, and the economy’s sound external settings. These strengths will underpin the sovereign’s improved creditworthiness,” S&P said.

The rating agency said the country’s stable outlook reflects its view that the Philippine economy would maintain the strong momentum over the medium term, in combination with contained fiscal deficits and stable public indebtedness.

S&P expects the Philippine economy to expand by 6.3 percent this year after a slower growth of 6.2 percent last year.

“The stable outlook reflects our assumption that the Philippine economy will continue to achieve above-average real GDP growth over the medium term, supporting the sovereign’s credit profile,” it said.

S&P said the Philippine economy is growing at a consistently faster pace than that of its peers and that strong economic growth is expected to continue over the forecast period as long as investment is maintained.

“The Philippine economy is among the fastest growing in the world on a 10-year weighted average, per capita basis – a reflection of its supportive policy dynamics and improving investment climate. The country has a relatively diversified economy with an increasingly strong track record of high and stable growth,” it said.

The debt watcher expects the country’s GDP per capita to rise to almost $3,400 in 2019.

“We project GDP per capita growth will average approximately 4.9 percent per year over 2019-2022, based on balanced contributions from private consumption and investment growth,” it said.

Together with the government’s sustainable public finances, the Philippines’ institutional and economic profile has improved.

S&P said the Philippine government is enacting increasingly effective fiscal policies, marked by improvements to the quality of expenditures, manageable fiscal deficits, and low levels of general government indebtedness.