Credit watchdog Japan Credit Rating Agency Ltd. (JCR) has affirmed the country’s investment-grade rating of “A-” with a stable economic outlook citing the country’s likely economic growth of above five percent this year.

The local economy grew by 5.4 percent in the first quarter from 5.3 percent in the fourth quarter of 2024 based on data from the Philippine Statistics Authority.

The Philippines posted the second-fastest growth rate in Asia, trailing Vietnam’s 7 percent and surpassing Indonesia’s 4.9 percent and Malaysia’s 4.4 percent.

“Despite increased uncertainty due to changes in US tariff policies, the Philippines’ foreign exchange liquidity position remains solid, and the economy is expected to retain high resilience to external shocks going forward,” JCR said.

BSP attributed the credit rater’s positive outlook to low local inflation rates, which helped sustain foreign investments and other business activities in the country.

The average inflation rate in the first four months of the year stood at 2 percent, meeting the Central Bank’s minimum target.

In the first quarter, household consumption rose by 5.3 percent from 4.7 percent quarter-on-quarter. The highest growth in revenues was seen in the wholesale and retail trade, financial and insurance, and manufacturing sectors.

“JCR’s affirmation will support and strengthen investment from Japan, one of the Philippines’ most important partners,” BSP Governor Eli Remolona Jr. said.

BSP said the Philippines’ gross international reserves remained more than adequate in the first four months at $105.3 billion, ready to cover 7.3 months of imports and 3.6 times short-term external debt based on residual maturity.

Investments in equities, excluding the reinvestment of earnings, in February totaled $108 million. The bulk of the funds came from Japan, which accounted for 56 percent, followed by the United States, which contributed 11 percent.

Capital inflow continues

Finance Secretary Ralph Recto expects more foreign investments to flow into the Philippines as the government implements tax incentives under the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy law.

He added that business will continue to grow and provide incomes to more Filipinos under the Capital Markets Efficiency Promotion Act.

This law entices more Filipinos to participate in the stock market and acquire additional income through dividends as it reduces stock transaction tax from 0.6 percent to 0.1 percent and the documentary stamp tax on the original issue of shares of stock from 1 percent to 0.75 percent.

“We will continue to work on creating an investment-enabling environment to increase the country’s economic growth potential,” Recto said.

He added that the government managed to keep the national debt-to-GDP ratio at 60.7 percent last year or below the 70 percent international threshold.

The government’s outstanding debt reached P16.75 trillion as of the end of April.

Despite the larger amount, finance officials said the Philippine debt was still lower than other countries in Asia, with Singapore posting P53.68 trillion, South Korea with P46.89 trillion, and Indonesia with P31.37 trillion.

JCR affirms PH’s high “A-” credit rating on the back of steady progress of PBBM’s economic agenda.

The Japan Credit Rating Agency, Ltd. (JCR) has recently affirmed its high “A-” credit rating and stable outlook on the Philippines, recognizing the steady progress of President Ferdinand R. Marcos Jr.’s economic agenda.

“The Marcos Jr. administration, which took office in June 2022, is implementing various policies aimed at achieving fiscal consolidation, infrastructure development, and poverty alleviation, and has been making steady progress to date,” JCR said in its report.

“We remain committed to securing more ‘A’ ratings by staying faithful to our fiscal consolidation plan and Road-to-A strategy,” Recto said.

“We have already passed key game-changing reforms, such as the CREATE MORE Act and the Capital Markets Efficiency Promotion Act, and will continue to work on creating an investment-enabling environment to increase the country’s economic growth potential,” he added.

An “A-” rating is a strong investment-grade score that reflects robust creditworthiness and macroeconomic stability. It signals confidence to investors and creditors, resulting in lower interest rates on borrowings of the national government and the private sector.

This allows the government to channel funds that would have otherwise been allotted for interest payments towards more development programs, such as more infrastructure projects, improved social services, a better health care system and quality education. It also helps attract more foreign direct investments into the country, which will create better employment opportunities for Filipinos.

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The JCR’s latest affirmation keeps the Philippines well-positioned to maintain high investment-grade ratings from all major global and regional credit agencies.

According to the Japanese debt-watcher, its latest rating affirmation reflects the Philippines’ high and sustained economic growth supported by solid domestic demand, low-level external debt, and resilience to external shocks.

This year, JCR projects the country’s real GDP growth rate to remain in the upper five percent range due to robust domestic demand despite global uncertainties such as shifts in US tariff policy.

The rating agency likewise recognized the Philippines’ progress in fiscal consolidation, highlighting the continued narrowing of the fiscal deficit ratios and a government debt-to-GDP ratio of approximately 60% by end-2024—one of the lowest among sovereigns rated in the A-range by JCR.

JCR further lauded the passage of the Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) Act, which enhances the ease of doing business, clarifies the scope of value-added tax (VAT), rationalizes the VAT and excise tax refund system, and streamlines income tax incentives.

These measures, according to the agency, have strengthened the tax regime and improved the country’s overall investment climate.

It also recognized the government’s progress in implementing the Build Better More program and its move to leverage private sector investments in infrastructure through public-private partnerships (PPPs).

More importantly, JCR noted that the poverty rate is declining at a faster-than-expected pace—a clear indication that economic growth is reaching more Filipino families.