Philippines markets: Fitch lowers outlook, affirms rating
Debt rating outlook lowered.
Group Research - Econs, Radhika Rao21 Apr 2026
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Fitch Ratings lowered Philippines’ outlook to ‘negative’ from ‘stable’, while affirming the ‘BBB’ sovereign rating, keeping the credit on par with Indonesia in the region. As it stands, Moody’s and Fitch have Philippines at two rungs up in the investible grade ladder, while S&P places the credit one level higher at BBB+. Fitch primarily highlighted growth risks from slower public spending and uncertain capex recovery, which were being compounded by exposure to the energy price shock. Despite weak growth prospects (Fitch at 4.6% yoy in 2026), the agency expressed confidence on the economy’s ability to keep the national government deficit stable at 5.6% of GDP and project general government debt to ease to 54.3% of GDP from 55.3% last year. The likelihood of higher inflation pushing up the nominal GDP growth rate is viewed as a key counterbalancing factor for these ratios. Growth in 4Q25 was amongst the weakest rates since the pandemic, owing to the overhang of graft allegations involving flood control infrastructure, with 1Q26 to be impacted by the subdued handover as well as the national energy emergency measures announced last month.

Earlier in the year, Moody’s and Fitch had flagged elevated debt and debt affordability as key constraints to the credit, citing a sharp jump in the national debt to GDP ratio to the highest levels in two decades and weak pace of fiscal consolidation. A negative outlook change typically reflects a cautious view on the sovereign, opening the window for follow-up action over the next 18-24 months. Meanwhile, the BSP meets this week, and we expect the benchmark rate to be held unchanged. In our read of the likely sequence (link) amongst the Asean central banks, Philippines is in the hawkish camp, leaving the door open to modest tightening moves if price risks prevail, as retail fuel prices are prone to swings in tune with global prices.

Radhika Rao

Senior Economist – Eurozone, India, Indonesia
radhikarao@dbs.com
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