Fitch revises Philippines’ outlook to ‘negative’ as energy shock weighs on growth
Credit ratings agency Fitch revised the Philippines’ outlook to “negative” from “stable” on Monday, citing risks to medium-term growth from disrupted public investment and the country’s high exposure to the global energy shock.
The Philippines is particularly vulnerable to the Middle East conflict due to its heavy reliance on imported energy and the risk of softer remittance inflows from the Gulf region, the agency said. While the government has rolled out targeted subsidies for vulnerable sectors, Fitch said consumers are absorbing the bulk of energy price increases.
Last week, President Ferdinand Marcos Jr suspended taxes on kerosene and liquefied petroleum gas to cushion consumers from rising fuel costs.
The country’s central bank has also allowed banks to grant borrowers more time to repay loans, as part of relief measures aimed at supporting consumers and businesses hit by the energy crisis. It even urged banks to temporarily suspend fees for online transactions.
Fitch forecast that economic growth would remain below recent levels as public capital spending recovers gradually and high energy prices weigh on consumption.
The Philippines had said in March its power system would operate under guidelines that prioritize renewable energy and conserve critical fuel inventories after it suspended electricity sales on the Wholesale Electricity Spot Market due to fuel supply risks and price volatility caused by the Iran war.
Fitch also flagged lingering domestic political risks from the rift between Mr. Marcos and Vice President Sara Duterte, but said the tensions were unlikely to undermine economic policymaking.
Earlier this month, S&P Global had also revised the Philippines’ outlook to “stable” from “positive”, citing heightened risks to the country’s external and fiscal metrics stemming from the war in the Middle East.
Fitch maintained the country’s long-term foreign-currency rating at “BBB”. — Reuters
