Metro Manila (CNN Philippines, October 27) — Credit watcher Fitch Ratings maintained its negative outlook for the Philippines as it noted lingering inflation, coupled with weak export performance, pose risks to medium-term growth prospects.
The outlook “reflects risks to Philippines’ medium-term growth prospects, fiscal adjustment path and external buffers in an environment of higher interest rates, weaker external demand and higher commodity prices,” said Fitch Ratings, which also kept the country’s “BBB” credit rating.
In its report Thursday, Fitch Ratings said it expects local gross domestic product (GDP) growth of 6.8% in 2022 as the economy further reopens.
“Growth in [first half of 2022] averaged 7.8% and our forecast assumes a slowdown from 2H22 amid monetary tightening, high imported inflation and weaker global demand,” it added.
President Ferdinand “Bongbong” Marcos Jr. earlier hinted that his administration was leaning towards increasing interest rates to tame inflation.
“We will continue to use interest rates to mitigate the effects,” Marcos said following his meeting with economic managers on Oct. 18.
READ: Marcos signals higher interest rates to fight rising prices
Last month, the Bangko Sentral ng Pilipinas raised the borrowing rate to 4.25%. Overnight deposit and lending rates were also bumped up to 3.75% and 4.75%, respectively.
Filipino consumers saw inflation climb to 6.9% in September, its highest in four years.
The Philippines’ trade gap also widened to $6 billion in August as the country recorded more imports than exports. This came as the peso continued to lose ground against the greenback, even touching the ₱59-level this month.
