MANILA – Moody’s Investors Service has kept its investment grade rating for the Philippines.
Moody’s said it is keeping its Baa2 rating with a stable outlook on the country citing the Philippines’ strong growth prospects on the back of robust consumption supported by remittances from overseas Filipinos and a strong BPO sector.
“The Philippines’ real GDP growth averaged 6.4 percent per year between 2014 and 2016, more than twice the corresponding median for Baa2-rated countries,” Moody’s said in a statement released Tuesday.
“We expect growth to be sustained at above 6 percent per year over the next two years, driven largely by the private sector,” Moody’s continued.
The debt watcher also noted strong inflows of foreign direct investments which reached a record high of $7.9 billion last year.
Moody’s added that if the government is able to implement its plan to ramp up spending on infrastructure, it could raise GDP growth towards the targeted range of 7 to 8 percent.
The debt watcher however also warned about risks to growth such as the possible escalation of the conflict in Marawi.
“Set against those positive developments, recent events such as the conflict in Marawi and the subsequent imposition of martial law in Mindanao are examples of escalating domestic political risks that could, should they multiply and escalate, undermine institutional strength and, ultimately, economic growth.”
Moody’s however also noted that neither the conflict in Marawi nor martial law in Mindanao have so far affected the country’s economy.
It also noted that the lower house of Congress passed the government’s tax reform package “in part due to the intervention of the President.”
“However, the confrontational nature of the administration’s political agenda could potentially reduce the effectiveness of governance, or negatively affect investment and growth,” Moody’s said.
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