While the country appears to be on a roll after receiving an affirmation from Moody’s Ratings on the heels of an upgrade by a Japanese credit watcher, experts believe the economy is still performing below its potential.

Moody’s credited the series of reforms under President Ferdinand Marcos Jr. in affirming on Friday the Philippines’ investment-grade credit rating of “Baa2” with a “stable” outlook.

Moody’s cited the country’s reforms to liberalize the economy, fiscal consolidation efforts, and robust macroeconomic fundamentals for its latest action.

According to Moody’s, “The passage of reforms over the past several years to liberalize the Philippine economy will support medium-term growth potential by supporting a business-friendly environment and attracting foreign investments.”

Prior to Moody’s, Japan’s Rating and Investment Information Inc. (R&I) upgraded its rating on the Philippines from “BBB+” with a positive outlook last year to “A-” with a stable outlook.

Both recent positive actions from economic doctors are expected to fuel steady momentum but the failure of growth to reach its full potential is frustrating.

Previously, the lack of government support was blamed for the boom and bust cycle since not enough infrastructure were built to accommodate growth.

The cycle involved a series of years of strong growth followed by a period of lethargy.

Now that the Build Better More projects are sprouting all over the country, the prosperity momentum is hobbled by underspending.

Finance Secretary Ralph G. Recto said Moody’s action reflected strong confidence in the medium-term growth potential due to the enactment of investment-friendly reforms.

Yet, experts are warning of the slackening of government spending creating a paradox in which the country outperforms its regional rivals but is at the same time underachieving.

A Standard and Poor’s report said holding back public spending had resulted in a decline in consumer confidence.

Had the government been more efficient in spending the budget on infrastructure, growth would have reached 7 percent.

Failure of the economy to hit its full potential made the environment less attractive to investors.

The general business environment in the Philippines struggles compared to more dynamic countries like Vietnam, a macro economic analyst said.

Another sector that has weighed down the growth potential is the laggard agriculture sector.

Without the full development of the agriculture industry, the middle class — which is the main driver of prosperity in most developed nations — will remain weak.

The good news is that the outlook is still good, which the government and the nation should take advantage of to realize its fullest promise.

In its ratings report, Moody’s said the passage of a series of reforms to liberalize the economy to attract foreign investment over the past several years will support the high medium-term growth potential.

It expects fiscal consolidation to resume with the debt burden to remain higher than pre-pandemic levels “but comparable to similarly rated peers over the medium term.”

Among the risks to maintaining the momentum are “structural challenges that include low per capita income relative to similarly rated peers, some constraints to the quality of institutions which stand in contrast to strong policy effectiveness, and high exposure to physical climate and broad social risks. Heightened geopolitical uncertainty amid territorial tensions with China remains a constraint for the rating,” it said.

The message is that it is not a time to be complacent and the government must continue with the reform agenda to improve investors’ outlook.

The country has been used to being referred to as missing the boat of development in the region.

It is time that it takes the ship’s wheel and leads the region toward the horizon of progress.