The USD437 billion Philippine economy is projected to grow by 5.7 percent in 2024, according to Fitch Ratings, which credits the country’s effective monetary policy for the positive outlook. The credit rating agency highlighted the significant progress made in reducing inflation, which averaged just 3.2 percent in the first 11 months of 2024, a sharp decline from 6.0 percent during the same period last year.
Fitch attributes this achievement to the proactive steps taken by the Bangko Sentral ng Pilipinas (BSP), which raised interest rates last year by 100 basis points to bring inflation within the government’s target range of 2.0 percent to 4.0 percent. The central bank’s efforts culminated in an off-cycle rate hike of 25 basis points in October 2023. Following these moves, inflation has cooled significantly, falling to 2.5 percent in November. In response, the BSP has cut rates twice in 2024—by 25 basis points in both August and October—to support economic growth.
Fitch forecasts that this growth momentum will continue, with the economy expected to expand by 5.9 percent in 2025 and 6.2 percent in 2026. The report also points to broader efforts by the BSP to deepen the local financial market, including the launch of the Peso Interest Rate Swaps (Peso IRS) to increase liquidity and facilitate investment. This initiative aims to enhance market accessibility for both domestic and international investors.
This positive assessment follows recent upgrades from other credit agencies. In November, Standard & Poor’s revised the Philippines’ BBB+ rating outlook to “positive,” while Rating and Investment Information, Inc. (R&I) raised the country’s rating to A- earlier this year.
Fitch’s update underscores the effectiveness of the Philippines’ strategic monetary measures in fostering economic stability, positioning the country for sustained growth and development in the coming years.
