These are balanced against low per capita income and modest debt affordability, both of which are structurally weaker as compared to similarly rated peers.

Although the country’s growth outlook had been downgraded by various analysts and financial entities, its credit profile remains strong and adequate, Moody’s Investors Service said on Friday.

“The Philippines’ (Baa2 stable) credit profile is characterized by strong economic performance, a strengthening fiscal position and limited vulnerability to external shocks,” Moody’s said.

“These are balanced against low per capita income and modest debt affordability, both of which are structurally weaker as compared to similarly rated peers,” it added.

According to the credit watchdog, the risk of political interference has not constrained the economic and fiscal reform agenda and effective monetary policy contributed to overall macroeconomic stability and a generally sound Philippine financial system.

Among the country’s credit strengths recognized by Moody’s include its robust growth potential supported by favorable demographics, moderate government debt levels, improving debt affordability owing in part to revenue reform and its stable and resilient banking system.

Credit risks, on the other hand, include its low per capita income and revenue mobilization versus investment-grade peers and weak rule of law and control of corruption weighing on institutional capacity.

“The stable outlook on the Philippines’ rating incorporates our view that strong GDP growth relative to rating peers could accelerate even further, especially if the government achieves its goal of higher infrastructure investment, against the backdrop of a stable external payments position and a financially sound banking system,” Moody’s said.

“We also expect that progress on improving government revenue will offset higher spending, help keep government debt stable and strengthen debt affordability. At the same time, the government has a relatively short window of about two years to pursue its reform agenda because of political considerations ahead of general elections scheduled for 2022,” it added.

Moody’s has kept unchanged the projected GDP growth for the Philippines this year at 5.8 percent. Growth for 2020 was likewise retained at 6.2 percent.

Despite the sub-7 percent growth forecast, which reflects a miss from the government’s 6 to 7 percent growth target, Moody’s said the Philippines remains among the fastest economies in the region.

Previously, the World Bank downgraded its GDP projection for the Philippines from 6.4 percent to just 5.8 percent. Similarly, Asian Development Bank and ASEAN+3 Macroeconomic Research Office made their own downward adjustments for the same at 6 percent, which compares to their previous forecasts of 6.2 percent and 6.3 percent respectively.