Japan’s Rating and Investment Information Inc. (R&I) on Thursday affirmed the country’s credit standing on the basis of its sustained ability to expand at a fairly robust pace.
“The Philippines’s economy continues to grow at a solid pace of over 6 percent. In addition to private consumption, which has been the primary driver of the economy, brisk investment has contributed to the growth in the past couple of years. This strong economic trend, along with stability in prices and the financial system, has created a favorable macroeconomic environment,” R&I said.
It was only early this month when the credit watcher upgraded the Philippines from triple “B minus” (“BBB-”) to “triple B” (“BBB”). The affirmation had a corollary stable outlook, which means the rating will keep for the next 12 to 18 months.
While it noted that risks are limited in both the fiscal and external fronts and that the country’s macroeconomic fundamentals should remain strong amid local and international challenges, R&I said the Philippines needs to improve on its ability to attract more foreign investments, as well as ramp up its per-capita income performance.
“Though increasing, the share of investment in gross domestic product [GDP] was about 22 percent in 2014, which is still the lowest among neighboring countries. Per-capita income levels also remain low compared to other major Asean [Association of Southeast Asian Nations] members,” R&I said.
In the political sphere, R&I noted several improvements that the Philippines continue to push.
“While the presidential election in May 2016 is arousing concerns over policy uncertainties, a new administration is expected to maintain and even develop the reform momentum further,” R&I said.
The Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. welcomed the R&I credit affirmation.
“The Philippines remains in a desired convergence of rapid growth and low inflation. We have sufficient buffers against external shocks. The banking sector remains sound and stable. The credit-rating agencies recognize these,” Tetangco said.
“We all need to ensure that the Philippines keeps its hard-earned investment-grade sovereign credit ratings beyond 2016,” he added.