By Katherine K. Chan, Reporter
S&P GLOBAL RATINGS continues to see strong credit standing prospects for the Philippines because it stays optimistic on the country’s growth fundamentals despite drags from the recent flood control corruption scandal.
Speaking at a webinar on Thursday, Yee Farn Phua, director for sovereign and international public finance rankings at S&P Global Rankings, said the Philippine economy will likely rebound immediately once the flood control controversy wanes.
“Due to the slowdown in lots of infrastructure projects, there was (an) economic growth slowdown within the Philippines quite considerably in the previous couple of months,” Mr. Phua said.
“Nonetheless, we don’t think this can be a structural problem within the Philippines’ economic growth story. We predict that the basics of the Philippine economy proceed to be strong. This investigation, we expect that when it passes, we could see growth rebounding quite quickly,” he added.
In November 2025, S&P affirmed the Philippines’ long-term “BBB+” and short-term “A-2” credit rankings. It also maintained its “positive” outlook on the country, indicating a possible rating upgrade over the following one to 2 years if improvements in credit fundamentals are sustained.
“Now, after we put the Philippines on (a) positive outlook one yr plus ago, it wasn’t simply because of improvement in climate metrics overnight,” Mr. Phua said. “It was really an remark of the incontrovertible fact that institutional settings within the Philippines have strengthened quite considerably during the last decade or so. And that has led to superb growth outcomes and at the identical time sustainable public finance.”
Still, Mr. Phua noted that political concerns emerging from the flood mess could slow among the country’s credit improvement.
Nonetheless, he added that the economic spillover from the corruption allegations against several Public Works officials, lawmakers and personal contractors in addition to the impeachment complaints against the President attributable to the flood control issue may only be “temporary.”
Last yr, the Philippines missed its growth goal for a 3rd straight yr after gross domestic product (GDP) slowed to a post-pandemic low of 4.4% as weak confidence dampened investments, household consumption and government spending.
Despite this, S&P sees the economy rebounding to a 5.7% growth this yr. If realized, the federal government will meet its 5%-6% goal for the yr.
“For this yr, I feel our growth forecast for the Philippines remains to be relatively strong at 5.7%,” Mr. Phua said. “So, despite the economic slowdown of late, the Philippines continues to be an outperformer in comparison to peers at a level of comparable income.”
This, he added, comes on the back of a projected narrowing of the country’s fiscal and current account deficits over the following yr or two, which could boost the case for a better credit standing.
“Interestingly, due to slowdown in infrastructure spending in the previous couple of months, it is feasible that you’ll begin to see (the) fiscal deficit actually be lower than what was originally budgeted for,” Mr. Phua said.
“The opposite thing is also due to slowdown within the projects and in addition the reduction in capital goods import, we’re also beginning to see that the present account deficit could come all the way down to be narrower than before as well,” he added.
Based on latest data, infrastructure spending declined for the fifth consecutive month after falling by 45.2% yr on yr to P48 billion in November.
Meanwhile, the country’s budget deficit sharply narrowed through the same month, shrinking by 26.02% to P157.6 billion from P213 billion a yr earlier.
Nonetheless, single-digit growth in spending and revenue collection led the gap to widen to P1.26 trillion within the 11-month period.
The federal government desires to cap the fiscal deficit at P1.56 trillion by end-2025.
Meanwhile, the Philippines’ current account balance stood at a $12.5-billion deficit by the tip of the third quarter, latest Bangko Sentral ng Pilipinas (BSP) data showed. This was comparable to -3.6% of the GDP.
The BSP expects the present account gap to finish at $15.5 billion in 2025 or -3.2% of GDP, before narrowing to $15.3 billion or -3% of GDP this yr.
Still, Mr. Phua said S&P will keep monitoring how further developments within the flood control scandal would impact the Philippines’ long-term credit standing prospects.