S&P Global Ratings has revised its outlook on the Philippines from stable to positive, indicating that effective policymaking has led to structural improvements in the country’s fiscal health.
The agency affirmed the Philippines’ long-term sovereign credit rating at ‘BBB+’ and the short-term rating at ‘A-2’, noting that fiscal reforms have increased government revenue as a share of GDP, facilitating public investments that bolster infrastructure and economic growth.
The Philippines’ external position remains robust, the rating agency noted, being characterized by rising foreign exchange reserves and low external debt.
The positive outlook reflects S&P’s improved assessment of the Philippines’ institutional and policy environment, which could enhance sovereign support over the next 12 to 24 months if the economy continues to demonstrate external strength and healthy growth rates.
The agency’s analysis highlights the Philippines’ above-average economic growth potential, supported by strong institutional frameworks and recent reforms aimed at enhancing business conditions.
The country’s GDP growth is projected at 5.5 percent for 2024, following a 6.1 percent year-on-year increase in the first half of the year, although growth slowed to 5.2 percent in the third quarter due to a contraction in agriculture.
The Philippines reported a record PHP285 billion ($5.1 billion) in gross gaming revenue for 2023, up 33.1 percent from the preceding year, while the Philippine Amusement and Gaming Corporation (PAGCOR) predicted it could reach PHP336 billion ($5.7 billion) in 2024.
Inflation has eased compared to 2023, averaging 3.4 percent year-on-year in the first nine months of 2024, down from 6 percent the previous year. This decline has been partly attributed to government measures to lower import tariffs on critical commodities like rice.
The Philippine government continues to prioritize infrastructure development and economic reforms, recently enacting laws to strengthen public-private partnerships and enhance tax incentives for enterprises. These efforts are expected to support economic growth and attract foreign direct investment.
S&P emphasized that the Philippines’ strong external position, with gross foreign reserves reaching a record $111 billion, provides a buffer against economic fluctuations. The country has also seen consistent remittance inflows and stable foreign direct investment, bolstering its economic outlook.
At the same time, the banking sector benefits from a stable macroeconomic environment, with strong liquidity and low exposure to global market volatility. The Bangko Sentral ng Pilipinas has adopted a cautious approach to monetary policy, recently lowering interest rates to support economic recovery.
