The Japan Credit Rating Agency (JCR) has reaffirmed its A- rating for the Philippines, highlighting significant factors such as the nation's sustained high economic growth, robust domestic demand, and manageable levels of external debt.

In its recent assessment, JCR acknowledged the resilience of the Philippine economy against external shocks, reinforced by substantial foreign exchange reserves.

JCR commended the ongoing fiscal consolidation and infrastructure development initiatives under the Marcos administration, which have displayed consistent progress.

The agency noted that the combination of these efforts is expected to enhance the country's creditworthiness as it continues to monitor relevant developments closely.

In terms of economic performance, the Philippines recorded a gross domestic product (GDP) growth rate of 5.4 percent in the first quarter of the year, a slight increase from the 5.3 percent growth in the preceding quarter, aided by strong household consumption.

Despite these positive economic indicators, JCR pointed out that addressing income inequality, particularly through rural development and infrastructure investments, poses significant challenges for the Philippines.

The agency anticipates that the economy will sustain growth in the upper five percent range through 2025, primarily driven by domestic demand amid persistent external uncertainties.

The Marcos administration's 'Build Better More' program aims to increase infrastructure expenditure to five to six percent of GDP annually, projected to serve as a crucial growth catalyst.

In terms of fiscal health, JCR reported a reduction in the fiscal deficit to 5.7 percent of GDP for 2024, reflecting improvements in the primary fiscal balance despite rising interest payments.

Furthermore, the government debt to GDP ratio was noted to be approximately 60 percent at the end of 2024, which is comparatively low among sovereign entities rated in the A range.

The external economic position of the Philippines also maintained stability, with external debt manageable at 29.8 percent of GDP. The foreign exchange reserves were recorded at $106.3 billion by the end of 2024, providing a solid buffer against external volatility.

JCR also commented on the potential impact of changing US tariff policies, yet emphasized that the Philippines' foreign exchange liquidity remains robust.

The agency maintains that the economy exhibits a high degree of resilience to external shocks moving forward.

The Bangko Sentral ng Pilipinas (BSP) expressed its approval of the credit rating affirmation, emphasizing that an investment-grade rating signifies low credit risk and advantageous financing conditions for essential public services and infrastructure development.

BSP Governor Eli Remolona Jr. highlighted that JCR’s affirmation could bolster investment from Japan, a key partner for the Philippines.

The BSP reaffirmed its commitment to maintaining price and financial stability to enhance the country’s resilience in the context of global challenges.

Additionally, in April, Fitch Ratings reaffirmed its ‘BBB’ rating with a stable outlook for the Philippines, pointing to easing inflation, sound monetary policy, and stable public debt as contributing factors.