Fitch Ratings has reaffirmed the Philippines' Long-Term Foreign-Currency Issuer Default Rating at "BBB" with a Stable Outlook, citing the country’s success in taming inflation and robust medium-term growth potential.

In a report, Fitch Ratings said the "BBB" rating and Stable Outlook "reflect the Philippines' strong medium-term growth, which supports a gradual reduction in government debt, and the large size of the economy relative to 'BBB' peers."

A "BBB" rating, which is above the minimum investment grade, indicates a low expectation of default risk, with the country's capacity to meet financial commitments deemed adequate.

Fitch Ratings expects the Philippine economy to grow by 5.6 percent this year, with growth picking up to over 6 percent in the medium term.

"Our forecast reflects a payoff from investments in infrastructure and a series of structural reforms in recent years to liberalize the economy and foster trade and investment, including through public-private partnerships," it said.

Fitch said the country’s domestic focus limits exposure to global trade tensions.

It said the relatively low US tariff announced by the US on Philippine exports this month could also be an advantage compared to regional peers.

Fitch Ratings also said the general government budget deficit is expected to narrow to 3.6 percent of the country's gross domestic product (GDP) by 2026, mainly driven by spending efficiencies and improved tax collection.

The credit rating agency also cited the country's success in taming inflation.

Data from the Philippine Statistics Authority showed that inflation settled at 1.8 percent in March, well within the government's 2 to 4 percent target range.

Fitch views the Bangko Sentral ng Pilipinas’ (BSP) inflation targeting framework as “credible.”

It also sees inflation remaining at around 2 percent in 2025 and 2026.

BSP Governor Eli Remolona Jr. welcomed Fitch's reaffirmation of the country’s investment-grade credit rating.

“The BSP took actions to help keep inflation manageable and promote sustainable economic growth. The BSP will continue to do so," he said in a statement.

Other rating agencies earlier echoed their positive assessments.

S&P Global Ratings revised its outlook to positive in November 2024 while Rating and Investment Information, Inc. upgraded the country to “A-” with a stable outlook in August last year.

An investment-grade rating signals low credit risk and affordable access to funding.

This enables a country to allocate funds to socially beneficial initiatives and programs.