Moody’s affirms Philippines’ Baa2 rating

Updated at 9:30 p.m. on August 24, 2026

MANILA, Philippines — Moody’s Ratings on Monday affirmed the Philippines’ investment-grade “Baa2” rating, maintaining a stable outlook as it expects a recovery in economic growth to help stabilize the country’s fiscal metrics over the next two years.

In its latest rating action, Moody’s said it now expects economic growth to come in at 3.6 percent in 2026 before recovering to 5.3 percent in 2027. If realized, the 2026 growth print would still be slower than the 4.4 percent recorded in 2025 but would fall within the government’s revised 3.5- to 4.5-percent target.

READ: Moody’s keeps ‘Baa2’ rating on 3 Philippine banks

The forecast comes as the economy grapples with a double whammy of higher food and energy prices following the conflict in the Middle East and a slowdown in government spending following the fallout from the flood-control probe. As of the second quarter of the year, economic growth had slumped to a 16-year low of 2.3 percent.

Moody’s, however, views the current weakness as largely cyclical.

“The Philippines’ medium-term growth potential and underlying credit fundamentals remain broadly supportive of the rating, even as the recovery in confidence may take time,” Moody’s said.

“The Philippines’ medium-term growth will continue to be underpinned by favorable demographics, resilient remittances and service exports, and a gradual strengthening of investment as confidence recovers, with electronics and other goods exports providing a more marginal offset,” it added.

On fiscal consolidation, the credit rater said it expects the general government deficit to narrow to around 3.9 percent of gross domestic product in 2026 from 4.3 percent in 2024.

“While weaker near-term growth will weigh on revenue buoyancy, we expect consolidation to stay on track, as the government’s response to recent energy shocks has been measured,” Moody’s said.

Meanwhile, Moody’s expects the general government debt burden to peak at around 58 percent of GDP in 2026 to 2027. 

Debt affordability, however, is expected to weaken over the next two to three years, with interest payments projected to absorb more than 14 percent of revenue. This is significantly higher than the roughly 9-percent median among Baa-rated sovereigns.

Moody’s last affirmed the Philippines’ Baa2 rating in August 2024. The Philippines first attained a Baa2 rating in December 2014, when Moody’s upgraded the country from Baa3.

READ: Moody’s affirms PH investment grade rating

Notably, Moody’s is now the only one of the three major credit rating agencies to maintain a stable outlook on the Philippines.

In April, Fitch Ratings affirmed its BBB rating but revised its outlook to “negative” from “stable,” while S&P Global Ratings maintained its BBB+ rating but revised its outlook to “stable” from “positive.”

“The stable outlook reflects our expectation that the government’s fiscal consolidation path and debt stabilization remain broadly on track despite the current cyclical slowdown. This view is supported by the government’s track record of navigating successive external shocks while maintaining broadly prudent macroeconomic policies,” Moody’s said.

Risks that could derail this outlook, however, include a slower-than-expected recovery in economic growth, continued weakness in public investment, political uncertainty ahead of the 2028 presidential elections and the passage of planned revenue measures. /pai