The Philippines may face a slower path to a credit rating upgrade due to political fallout from an alleged flood control corruption scandal, according to a report released by S&P Global Ratings.
In its report “Asia-Pacific Sovereigns Balance Risks And Investments in 2026: Balancing Act Continues,” the debt watcher noted that while the country’s economic metrics are strengthening, internal governance issues pose a risk.
S&P Global Ratings said the political spillover of alleged corruption related to flood-control projects may slow the credit improvement.
The credit agency maintains a positive outlook on the Philippines, alongside Laos and the Cook Islands, while most other sovereign ratings in the Asia-Pacific region remain stable.
The agency observed that Philippine sovereign credit metrics are strengthening as shrinking fiscal and current account deficits augment sovereign credit buffers to better support a higher rating over the next 2 to 3 years.
Broader geopolitical risks and heavy investment in artificial intelligence are expected to steer regional trends throughout 2026. S&P Global Ratings indicated that while the credit impact on the Asia-Pacific is likely negative, policymakers who position their economies for gains through supply-chain security and infrastructure investment may see improvements.
Vietnam and Malaysia were highlighted as regional leaders in attracting investment. Vietnam has combined a favorable business environment with infrastructure spending, while Malaysia saw a surge in IT exports and data center investments in 2025. Malaysia is expected to report economic growth of about 5 percent for the year.
Other regional updates included a strengthening external profile for Laos, which reported a current account surplus of $190 million in 2025. Official reserve assets for the country rose by $2 billion to $3.5 billion by the end of 2025. The Cook Islands saw a positive outlook driven by rising tourist arrivals from Australia and New Zealand.
While investor interest has focused on Indonesia and Japan, S&P Global Ratings said it does not see immediate risks to their sovereign ratings despite potential negative impacts on fiscal performance.
