A STRONG external position would anchor the Philippines’ “BBB+” investment grade credit rating amid the threat of rising prices and slower growth due to Russia’s continued invasion of Ukraine, S&P Global Ratings said on Thursday.“As a net external creditor, the Philippines’ external settings remain supportive of the ratings,” S&P said in a note. “On a net basis, lower real gross domestic product growth and a modest current account deficit may increase the government’s fiscal deficit.
Earlier this month, S&P lowered its growth forecast for the Philippines this year to 6.5% from 7%, citing the impact of the war in Ukraine on global oil prices. This is below the government’s 7-9% goal. S&P warned that monetary policy tightening by the US Federal Reserve could affect sovereign borrowers in Southeast Asia.
“However, the immediate effect of rising interest costs will likely remain manageable. Both governments over the past two years have made more use of domestic debt markets to fund higher fiscal deficits,” it added.
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