NEWS
Debt, downturn dampen Phl’s risk outlook
‘To curb agricultural smuggling, the first line of defense is border control. Goods should be inspected upon entry. The government should conduct these inspections rather than leave them to importers’ warehouses.’
The Philippines remained in the elevated-risk category in the second quarter of 2026, with its risk outlook deteriorating amid mounting fiscal pressures, slowing economic growth and political fragmentation, according to a report by the WR Advisory Group.
The Manila-based professional services firm gave the country an overall risk score of 10.375 out of 25 in its inaugural Philippine Political & Country Outlook Report, placing it in the elevated-risk band with a deteriorating outlook.
National government debt reached P19.07 trillion at the end of the second quarter, equivalent to 66 percent of gross domestic product (GDP).
Debt service totaled P1.23 trillion in the first half, while S&P Global Ratings and Fitch Ratings issued negative rating signals during the quarter, the report said.
Economic growth slowed to 2.3 percent year-on-year, the fourth consecutive quarter of deceleration.
Foreign direct investment net inflows fell 33.4 percent through May, while the Bangko Sentral ng Pilipinas reversed its easing cycle with two interest rate increases in response to the elevated inflation.
Risk analysis
WR Advisory Group president and CEO Robin Michael U. Garcia said the report was intended to help businesses better understand the political and economic uncertainties when making investment decisions.
“As one of the first political risk reports developed by a local firm, our WR Philippine Political & Country Outlook Report brings unmatched depth and nuance to the market,” Garcia said.
“Markets are deeply embedded in politics and society, yet Filipino firms have long lacked reliable political risk analysis to navigate these multifaceted uncertainties,” he added.
The report assessed country risks across eight categories covering governance, macroeconomic conditions and the operating environment. Fiscal and Sovereign Risk was rated high, while six other categories were classified as elevated. Security Risk was the only category rated low.
Political Stability, Policy and Regulatory Risk, Fiscal and Sovereign Risk, and Economic Growth Risk carried deteriorating outlooks. Institutional Integrity, External and Geopolitical Risk, Social and Labor Risk, and Security Risk were assessed as stable.
The firm said its outlook measures the projected direction of each risk category over the following 90 days and is separate from the numerical risk score.
End-year report
A deteriorating outlook indicates that the factors driving the current assessment are worsening and could lead to a higher score in the following quarter. Despite the elevated risks, the report described external, social, and security pressures as substantial but contained.
Chinese operations around Scarborough Shoal continued alongside expanded multinational military exercises, while inflation peaked at 7.2 percent in April, adding pressure to the transport and wage sectors. Underemployment, however, improved.
The quarterly report draws on a rolling 90-day evidence window and assesses each risk category by the likelihood of a risk-related event and the severity of its potential impact.
Its sources include proprietary survey data from the WR National Poll’s Philippine Public Opinion Monitor, government and international economic data, media reports, credit agency assessments, and legislative and judicial records.
The firm publishes the report quarterly, with its fourth-quarter edition serving as the annual report.