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Japan’s R&I affirms PHL investment grade rating
Japan-based Rating and Investment Information Inc. (R&I) on Tuesday affirmed a credit rating of investment grade for the Philippines, citing expectations of “solid” economic growth.
The Philippines’ foreign currency issuer rating was affirmed at “BBB” with a “stable” outlook.
Under the R&I rating system, “BBB” indicates that “claims paying ability is sufficient, though some factors require attention in times of major environmental changes.”
The affirmation is due to a favorable economic outlook in light of the government’s infrastructure spending program.
“The Philippines’ economy is expected to post solid growth, driven by aggressive infrastructure investment under the Rodrigo Duterte administration,” according to R&I.
The Philippine economy, as measured by the gross domestic product, grew by 6.4 percent in the first quarter of the year, 6.7 percent in the second quarter, and 6.9 percent in the third quarter.
Socioeconomic Planning Secretary Ernesto Pernia said earlier the economy was expected to grow by 6.7 to 6.9 percent this year.
However, R&I flagged possible inflationary pressures once the proposed Tax Reform for Acceleration and Inclusion Act (TRAIN) is signed into law.
“Going forward, given likely inflation pressure from tax reforms, higher oil prices and the weaker currency, as well as from buoyant domestic demand, consumer price trends and the way the central bank controls the situation would draw our attention,” it said.
Ratified by both chambers of Congress earlier this month, the tax reform measure was signed into law by President Duterte on Tuesday.
“R&I will keep an eye on whether solid economic growth will bring about a steady rise in income levels,” it said.
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