S&P Global Ratings on Thursday affirmed its ‘BBB+’ long-term and ‘A-2’ short-term sovereign credit ratings for the Philippines, maintaining a positive outlook.
The debt watcher said that an ongoing investigation into flood control projects, which has temporarily halted some infrastructure works, would not derail the country’s healthy long-term growth trajectory.
“An ongoing probe into flood-control projects has halted some infrastructure works in the Philippines. The resultant slowdown in public capital expenditure will dent GDP growth this year. However, we believe this will not derail the country’s long-term growth trajectory, which remains healthy,” S&P Global said in a statement,
The positive outlook reflects S&P’s view that the Philippines will maintain its external strength and healthy growth rate, and that fiscal performance will strengthen over the next 12 to 24 months. The agency’s assessment indicates that institutional and policy settings could provide stronger support for sovereign credit metrics during this period.
S&P said it expects real gross domestic product (GDP) growth of 4.8 percent in 2025, a decline from the historical trend due to the temporary reduction in public infrastructure spending. However, the agency projects medium-term GDP growth to rebound to about 6.2 percent over 2026 to 2028 on strong public and private consumption coupled with sustained investments. GDP per capita could rise to about $5,800 by 2028.
The ratings on the Philippines reflect the country’s above-average economic growth potential and strong external position. Policy settings have helped keep economic performance strong and sustained fiscal spending on public investment, it said.
While consolidation is ongoing, the government’s fiscal and debt settings deteriorated due to the pandemic fallout. S&P forecasts the general government deficit will average about 3.0 percent of GDP over the next three years.
It said a faster increase in fiscal revenue will help lower the general government deficit to 3.5 percent of GDP in 2025 from 3.7 percent in 2024.
The national government’s proposed budget for 2026 is P6.8 trillion, a 7.4-percent increase over the 2025 budget. Economic services, including the “Build, Better, More” infrastructure program, will receive about 28 percent of the total budget.
Net general government debt is forecast to come down to 41.8 percent of GDP by 2028, stabilizing from the post-pandemic surge, it said.
S&P said the Philippines’ external position remains a rating strength, underpinned by robust personal remittance inflows, which reached an all-time high of $38.3 billion in 2024.
Foreign direct investment (FDI) is also steady, with net inflows increasing by 22.5 percent in January to August 2025, reaching $5.2 billion. Reforms like the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Bill are expected to support FDI, it said.
The country’s current account deficit widened to 4 percent of GDP in 2024 but is expected to moderate over the forecast years. Gross foreign reserves provide a strong external buffer, totaling $110.2 billion in October 2025.
Inflation continues to ease, averaging 1.7 percent in the first 10 months of 2025.
The Bangko Sentral ng Pilipinas (BSP) has a sound record of keeping inflation low. The BSP has reduced the policy rate by 150 basis points since August 2024 and is likely to take an accommodative stance on monetary policy as inflation is currently below the target range, it said.
