By the staff
S&P Global Ratings has affirmed the Philippines’ long-term sovereign credit rating at BBB+ with a positive outlook, maintaining the country’s solid investment-grade status despite a temporary slowdown caused by the suspension of certain flood-control and infrastructure projects.
The agency kept the short-term rating at A-2 and the transfer and convertibility assessment at A, signaling continued confidence in the country’s ability to meet foreign-currency obligations.
In its latest report released Thursday, S&P acknowledged that the ongoing corruption probe into several public works projects has led to project halts and reviews, curtailing government capital spending and dragging near-term economic growth.
Third-quarter GDP growth slumped to just 4.0%—the slowest since the pandemic rebound period—partly reflecting these disruptions.
“A slowdown in public infrastructure investment in the Philippines is weighing on its near-term growth prospects. However, we believe this is temporary and economic growth prospects remain strong,” S&P said.
As a result, the agency downgraded its 2025 GDP forecast to 4.8%, significantly below the 6.3% average recorded in the prior three years.
Growth is expected to rebound to 5.7% in 2026 and average 6.2% annually through 2028, supported by resilient household consumption, recovering investment, and the eventual resumption of public infrastructure spending.
S&P highlighted the government’s steady post-pandemic fiscal consolidation, with the budget deficit projected to narrow to 3.5% of GDP in 2025 and average around 3% over the medium term. Public debt is seen stabilizing after the sharp rise during the health crisis.
On the external front, the Philippines continues to enjoy sizable buffers. Gross international reserves stood at $110.2 billion as of October, equivalent to 7–8 months of import cover.
Personal remittances reached a record $38.3 billion in 2024 and are on track for further growth this year, providing a steady inflow that offsets persistent current-account deficits.
The agency also praised the Bangko Sentral ng Pilipinas (BSP) for its credible monetary framework and operational independence. With inflation averaging only 1.7% year-to-date, the central bank has already delivered 175 basis points of policy rate cuts since August 2024 and is expected to maintain an accommodative stance.
BSP Governor Eli M. Remolona Jr. welcomed the decision. “S&P’s rating decision confirms our view of the favorable long-term economic growth prospects,” he said.
