MANILA -- International credit rating agency Fitch Ratings has affirmed the country’s long-term foreign-currency issuer default rating (IDR) at ‘BBB’ with a stable outlook.
Fitch Ratings said growth prospects in the Philippines remain favorable as it maintains its gross domestic product (GDP) growth forecast for the country at 6.6 percent in 2019 and 2020.
“Growth prospects remain favorable, supported by strong domestic demand and increasing infrastructure investment,” Fitch Ratings said in a statement Thursday.
It also noted that inflation rate is slowing down partly due to the hiking of interest rate by the Monetary Board and easing of supply-side pressures.
It also highlighted the government’s increasing revenue collections as it implements the first package of Tax Reform for Acceleration and Inclusion (TRAIN) law this year.
Fitch Ratings mentioned that infrastructure spending also drives government expenditure. For 2019, the draft 2019 budget allocated an infrastructure spending equivalent to 4.7 percent of the country’s GDP.
The international debt watcher also expects budget deficit at “manageable levels”.
But Fitch Ratings maintains that overheating risks remain in place for the Philippine economy with the rapid credit growth and widening of current account deficit.
“GDP growth could come under downward pressure, similar to other countries in the region, from the slowdown in China and escalating trade tensions with the US, and from rising domestic and global interest rates,” it added.
“The Philippines maintains a net external creditor position against the 'BBB' median's net debtor position. In addition, the Philippines is less vulnerable to large outflows compared with some of its neighbors in the region, given lower non-resident holdings of domestic debt and equities, although foreign outflows are likely in 2019 as global monetary conditions continue to tighten,” it said. (PNA)
