Japan Credit Rating Agency on Thursday kept its investment grade rating of ‘BBB+’ for the Philippines, citing the country’s robust economic growth and its ability to withstand external headwinds.
The rating is a notch below the A scale and is assigned a “stable” outlook, which means there are no pressing factors seen at the moment that may cause the rating to change at least over the short term.
The Investor Relations Office of Bangko Sentral ng Pilipinas said that JCR’s rating opinions were valuable for the Philippines as these would help guide Japanese companies in their investment decisions.
Japan is one of the Philippines’ biggest sources of foreign direct investments, accounting for 48.8 percent of net equity FDI of $2.035 billion in 2016.
JCR said its decision to continue assigning the Philippines the favorable rating of BBB+ showed “the country’s high level of economic growth underpinned by expanding domestic demand, resilience to external shocks supported by declining external debt and accumulation of foreign exchange reserves, and continued reduction of government debt burden.”
The Philippines’ gross domestic product grew 6.1 percent in 2015 and 6.9 percent in 2016, JCR noted.
It said growth was expected to remain robust this year, on the back of strong household consumption, rising private-sector investments and increasing government spending, especially on infrastructure.
JCR also cited the Philippines’ ample foreign exchange reserves, estimated at 5.6 times the country’s short-term external debt and 1.1 times its total external debt.
Bangko Sentral Governor Nestor Espenilla Jr., who took over the helm of BSP on July 3, welcomed the decision of JCR to affirm the country’s rating and outlook.
“The rating and outlook assigned by JCR to the Philippines are a testament to the confidence it has on the economy and to the trust it bestows on the ability of concerned authorities to continue managing the economy well,” Espenilla said.
“As far as the BSP is concerned, we will continue doing our share for the economy by striving to consistently fulfill our mandate of price and financial stability. Included in this task is prudent management of the country’s external accounts so that the economy maintains sufficient buffers against external headwinds,” Espenilla said.