On February 13 2020, Fitch Ratings moved the Philippines’ credit outlook to “positive,” a step that places the country close to earning an “A” grade. The agency said the change rests on a clear view: the Philippine economy is robust and continues to strengthen.
Underlying Strengths Cited by Fitch
Fitch’s Associate Director for Asia Pacific Sovereigns, Sagarika Chandra, described the nation’s macroeconomic picture as “very strong” and noted it “has stayed intact.” She emphasized that this consistency is unusual in a region where growth frequently falters. The Philippines’ gross domestic product has averaged more than six percent in recent years.
Fitch identified three main drivers of that expansion: a steadily growing services sector, a rebound in agriculture after a prolonged slump, and a boom in construction activity.
Infrastructure Program Highlighted as a Key Factor
The government’s infrastructure push — encompassing new roads, bridges and airports — remains on schedule. Chandra specifically pointed to this program, saying “The infrastructure program of the government that still remains on track” contributes to the sustained macro story.
What the Upgrade Means for Borrowing Costs and the Economy
A more favorable rating lowers the price of borrowing. Interest rates on loans decline, making it cheaper for businesses to expand and for individuals to obtain credit.
The resulting increase in investment, domestic activity and job creation sets off a virtuous cycle: cheaper financing fuels more growth‑oriented spending, which in turn helps reduce debt faster. Finance Secretary Carlos Dominguez III framed the move as an alignment, stating the Philippines looks forward to its credit ratings matching “its level of creditworthiness as indicated by a decreasing debt-to-GDP ratio and positive economic” performance.
Timing Amid Global Uncertainty
The upgrade arrived while global markets were nervous because of trade tensions, political unrest and slowing growth in major economies, prompting many rating agencies to tread cautiously. Fitch’s decision to give the Philippines a thumbs‑up suggests the country’s fundamentals are solid enough to weather external headwinds. The agency stressed that the domestic economy, rather than export demand, is the primary narrative.
The visible infrastructure program raises the nation’s productive capacity: better roads speed the movement of goods, new airports open tourism and trade routes, and bridges link previously isolated regions.
The Path to an “A” Rating
Fitch’s “BBB” outlook with a positive notch signals expectations that the growth‑financing cycle will continue. Reaching an “A” grade would put the Philippines alongside the world’s most creditworthy sovereigns, delivering even lower borrowing costs and greater investor confidence. Achieving that goal requires maintaining a falling debt‑to‑GDP ratio, exercising fiscal discipline while funding infrastructure, and preserving the macroeconomic story that Fitch has praised.
For now, the trajectory appears steady: the upgrade reflects years of consistent growth, a clear policy direction, and an economy that has diversified beyond its historic reliance on remittances and outsourcing. Services, agriculture and construction are all contributing, with the infrastructure program serving as the backbone.
Fitch sees the progress; the market is expected to follow suit.
