Japan debt watcher cites strong growth outlook
MANILA, Philippines — Japan-based debt watcher Rating and Investment Information Inc. (R&I) has affirmed the Philippines’ investment grade rating at “A-” with a stable outlook, citing robust growth prospects, manageable external risks and continued progress in fiscal consolidation.
In a report, R&I said the Philippine economy remains one of the fastest growing in Southeast Asia, supported by sustained public and private investments, resilient household consumption and the continued expansion of key industries such as information technology-business process management (IT-BPM) and electronics manufacturing.
“The Philippines is expected to realize stable economic growth and higher income levels against the backdrop of robust investments and population growth,” the rating agency said.
The economy grew by 5.5 percent in the second quarter from 5.4 percent in the first quarter. It was also the fastest growth rate since the 6.5 percent expansion in the same quarter a year ago.
The latest growth figure, however, hit the lower end of the government’s 5.5 to 6.5 percent full-year target, bringing the first half average to 5.4 percent.
R&I said the outlook is favorable, with inflation easing sharply to a six-year low of 0.9 percent in July, bringing the 2025 average to 1.7 percent on the back of declining rice prices.
While the current account remains in deficit due to higher imports of construction materials and other capital goods, R&I said this reflects the country’s infrastructure drive and future growth potential. The shortfall is offset by resilient overseas remittances and ample foreign exchange reserves, keeping external risks “limited.”
The debt watcher also pointed to the Marcos administration’s efforts to balance growth with fiscal discipline. The 2025 national budget projects a fiscal deficit of 5.5 percent of GDP, with revenue measures such as the value-added tax on digital services helping to boost collections.
The national government’s outstanding debt stood at 60.7 percent of GDP in 2024, but R&I expects the ratio to gradually decline in the coming years as fiscal reforms take hold. “The government debt ratio will remain manageable with the progress in reducing fiscal deficits,” it said.
R&I also downplayed the potential impact of the US reciprocal tariffs, noting that the 19-percent tariff rate is relatively low and Philippine exports to the US account for only a small share of the economy.
Under the Philippine Development Plan 2023-2028, the Marcos administration is pushing for accelerated infrastructure rollout, private sector-led investment, and stronger public-private partnerships to create jobs, cut poverty and lift household incomes.
“Eyes are on progress in further improving the country’s fundamentals for sustained economic growth under the Marcos Jr. administration,” R&I said.
Bangko Sentral ng Pilipinas (BSP) Governor Eli Remolona Jr. welcomed the affirmation, saying that “agile and evidence-based monetary policy” helped stabilize inflation.
“In line with its financial stability mandate, the BSP continues to strengthen the Philippine banking system through policies that underscore strong capitalization, prudent risk management and sound governance. These enable banks to finance productive economic activities while navigating a fast-evolving global economic landscape,” Remolona added.
The BSP also said that the latest rating decision echoed the positive assessments of other credit rating agencies.
Japan Credit Rating Agency and Fitch Ratings affirmed the country’s credit rating at “A-” and “BBB,” respectively, with a “stable” outlook earlier in the second quarter. At the same time, S&P Global Ratings revised its outlook on the Philippines to positive in November last year.
“An investment-grade rating signals low credit risk, helping reduce borrowing cost. This enables a country to allocate more funds to socially beneficial initiatives and programs,” the central bank said.