MANILA, Philippines – Global credit rating agency Standard & Poor’s (S&P) has projected that growth in per capita income in the country will hit the $3,000 mark this year as it affirmed the country’s investment grade rating at BBB on April 21.
S&P projects growth in real per capita income to rise from the 4.1% recorded last year to 4.4% this year and onwards to an average of 4.6% for the next 3 years brought about by sound macroeconomic fundamentals.
The firm also affirmed its credit rating of the Philippines at BBB, a notch higher than the minimum score within the investment-grade scale.
“The ratings on the Philippines reflect our assessment of its strong external position, which features rising foreign exchange reserves, and low and declining external debt,” S&P said in its latest report on the Philippines released Thursday.
The rating is also assigned a “stable” outlook, indicating it will likely stay the same over the short term given absence of significant risks.
“The stable outlook reflects our expectation that the key economic, fiscal, external, and monetary credit measures for the Philippines will continue to improve,” the report read.
The affirmation comes ahead of the May 9 elections, which has raised some worry over a potential slowdown in foreign investments.
S&P however had said previosuly that that the ucoming change in leadership is unlikely to reverse economic reforms.
“Our affirmation of the ratings is premised on the new administration after the May 2016 elections having a strong mandate to continue to pursue orthodox fiscal, economic, and development policies,” S&P said.
It also added that it expects the country’s external payments position to remain strong, adding that the country will continue to be a net external creditor to the rest of the world aided by continued foreign-exchange inflows led by remittances, BPO revenues and tourism.
S&P also cited manageability of the Philippines’ debt as another key strength, noting the country’s “low” foreign borrowings that mostly have long-term maturities.
The Bangko Sentral ng Pilipinas earlier this month said that gross international reserves (GIR) registered as of end-March hit $82.6 billion giving the country cover for 10.3 months worth of worth of imports of goods and payments of services and income.
As for risks, S&P pointed to uncertainty in the country’s export markets and inadequate infrastructure especially in transportation and energy as the main downside risks to its growth outlook.
“Rating us a notch above the minimum investment grade is an encouraging affirmation of President Aquino’s record of sound economic management. We still face strong external headwinds in the near term; we’ll keep our fundamentals strong and our debt resilient,” said Finance Secretary Cesar V. Purisima. – Rappler.com