Economy may grow above 6 percent – Fitch Fitch

MANILA, Philippines — Fitch Ratings sees the Philippine economy growing above six percent over the medium term, enough to affirm the country’s investment grade BBB credit rating and stable outlook.

The debt watcher said the rosy outlook was supported by large investments in infrastructure and reforms to foster trade and investment, including through public-private partnership.

“We forecast real GDP growth of above six percent over the medium term, considerably stronger than the BBB median of three percent,” Fitch said.

The Philippine economy rebounded with a strong 5.9 percent in the third quarter, fueled by government spending, after easing for three consecutive quarters at 4.3 percent in the second quarter.

“Growth in the first nine months averaged 5.5 percent year-on-year. The strong performance in the third quarter largely offset a decline in activity in the second quarter, which was driven by weak government spending execution,” Fitch said.

The expansion during the nine-month period is well below the six to seven percent target penned by economic managers through the Development Budget Coordination Committee (DBCC).

A rating of BBB sits above the minimum investment grade and suggests that expectations of default risk are low. It also indicates the ability of the country to meet its financial commitments.

The credit rating agency revised the Philippines’ credit rating outlook to stable from negative on May 22, meaning Fitch is not likely to change its rating over a one- to two-year period.

Fitch’s latest decision recognizes the Philippines’ strong medium-term growth prospects, gradually declining debt, macroeconomic stability and sound economic policies.

According to the debt watcher, the general government deficit of the Philippines may narrow to 3.8 percent of GDP by 2025, after edging up to 5.4 percent of GDP in 2022 on stronger spending by local government units.

This is consistent with a narrowing of the budgetary central government deficit to 4.9 percent of GDP by 2025 from 7.3 percent of GDP in 2022 as authorities’ focus on fostering economic growth and development.

Fitch said the national government is projecting a budget deficit of 4.1 percent of