Hanoi (VNA) – FitchRatings has revised the Philippines’ credit outlook from “stable” to “negative”, signalling rising risks to the country’s credit profile, while maintained the country's long-term foreign-currency rating at "BBB".
The Outlook revision reflects rising risks to the Philippines' strong medium-term growth prospects from recent disruptions to public investment, exacerbated in the near-term by elevated exposure to the ongoing global energy shock.
It forecasts GDP growth to stay below recent rates at 4.6% in 2026, as public capex recovers only gradually and higher energy costs weigh on household consumption.
The outlook downgrade was largely driven by vulnerabilities in the country’s external position, particularly its reliance on imported energy and exposure to oil price volatility. Rising energy import costs is expected to push the current account deficit (CAD) to 3.8% of GDP in 2026 from 3.3% in 2025.
Inflation is also seen accelerating, with Fitch projecting it to average 4.1% in 2026 from 1.7% in 2025, driven by higher energy prices. Risks, it said, are tilted to the upside if the shock persists.
On the fiscal side, Fitch expects the general government deficit to remain at 3.7% of GDP this year, warning that targeted subsidies may contain risks, but a prolonged energy shock could increase spending pressures.
A negative outlook reflects a higher likelihood of a downgrade over the medium term, typically within 12 to 18 months, if pressures persist.
But the Bangko Sentral ng Pilipinas clarified that this does not automatically imply a rating downgrade. “Based on Fitch’s definition, revision in the outlook does not imply a rating change is inevitable,”
BSP Governor Eli Remolona Jr. said the economy remains in a strong position despite rising risks.
He said the BSP is closely monitoring the impact of higher oil prices and geopolitical developments on inflation and the overall Philippine economy./.
