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MANILA - Fitch Ratings is holding on to its current credit rating on the Philippines, at least in the short run.
In a statement, the rating firm on Tuesday said it is affirming its current 'BB+' and 'BBB-' long-term foreign- and local-currency issuer default ratings, respectively on the country.
The Philippines' credit score is a notch below investment grade.
Fitch also has kept its stable outlook on the country, which means no adjustment in the actual rating is forthcoming in the near term.
"The ratings and outlook are supported by strong external finances, a track record of macroeconomic stability, favorable economic prospects, and falling public debt ratios," said Philip McNicholas, director in Fitch's Asia-Pacific Sovereign Ratings group.
"However, structural weaknesses including low average income, a weak business environment and a low fiscal revenue take weigh on the credit profile," he said.
The rating firm forecast the Philippine economy to grow 5.5 percent this year. The country's gross domestic product grew by 3.9 percent in 2011, but accelerated in the first quarter this year at 6.4 percent, making it Southeast Asia's fastest growing and Asia's second fastest after China.
Fitch also forecast Philippine inflation to average this year at 3.5 percent, well within the Bangko Sentral ng Pilipinas' target range of three to five percent.
"Lower inflation and a moderate fiscal deficit (2.6% of GDP expected for 2012) suggest scope for policy flexibility to respond to adverse economic shocks, should they materialize," McNicholas said.
"However, the country has some way to go to narrow the gap in credit and structural fundamentals with peers. Average incomes are low ($2,400 against a 'BB' range median of $4,200) and the level of human development is poor," he said.
"However, the recent pick-up in investment to 21.7 percent of GDP, bringing it in line with the 'BB' range peer median, is encouraging and could support stronger growth if sustained," he added.
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