S&P lowers Philippines outlook to stable on impact of Iran war
The ratings firm projects the country’s gross domestic product to grow 5.8% this year
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[MANILA] S&P Global Ratings lowered its outlook on the Philippines to stable from positive, saying the war in the Middle East has raised risks for the country’s balance of payments and fiscal position.
“Our base case assumes the war’s intensity will peak and the Strait of Hormuz’s effective closure will ease during April, but some disruptions are likely to persist for months,” S&P said on Wednesday (Apr 8).
The South-east Asian nation is particularly exposed to the Iran war as it depends heavily on oil imports from the Middle East. Oil prices have soared after Iran tightened its grip on traffic through the Strait of Hormuz, forcing countries such as the Philippines to seek alternative supplies.
S&P affirmed the Philippines’ long-term foreign currency debt rating at BBB+, two notches above the lowest investment grade. The stable outlook reflects expectations that the economy will continue to grow at a healthy pace and that the fiscal deficit will narrow over the next two years, it said.
Elevated energy prices are expected to widen the Philippines’ current account deficit this year and erode its external buffers, the ratings firm said.
“We may lower the ratings if the country’s long-term growth trend erodes significantly, leading to a deterioration in the government’s fiscal and debt positions,” it added.
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S&P projects the Philippines’ gross domestic product to grow 5.8 per cent this year, after expanding 4.4 per cent in 2025. BLOOMBERG
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