MANILA, Philippines — Filipinos, who are still reeling from the economic impact of the Covid-19 pandemic, will benefit from the improving economic growth of the country as it eventually breaks the cycle of poverty in the near future, President Ferdinand Marcos Jr. said Saturday.
The President issued the statement after the Japan-based Rating and Investment Information, Inc. (R&I) upgraded the Philippines’ investment grade rating to “A-” amid its strong economic performance.
In his message Saturday, Marcos said the country’s highest rating to date manifests high investors’ confidence in the Philippine economy, noting it’s also an upgrade on the lives of ordinary Filipinos.
He said the latest upgrade would cut borrowing costs and secure cheap and affordable financing for the government, businesses, and ordinary consumers.
This means instead of paying interest, Marcos said the government could spend on public services like infrastructure, healthcare facilities, and the construction of school buildings for young Filipinos.
“This will help us invest more in our people – paving the way for more Carlos Yulos in the near future,” the President said.
“We will keep giving our best to make sure that every Filipino benefits from economic growth until we break the cycle of poverty,” he added.
The R&I cited macroeconomic stability and high economic growth path and expected continuous improvement in the country’s fiscal balance as the basis for the ratings upgrade to “A-,” one notch up from the country’s previous rating of “BBB+” in August last year.
The Philippines was also upgraded to a “stable” outlook from the previous “positive” grade given by the credit rating firm.
Single-digit poverty rate.
Also on Saturday, Finance Undersecretary Domini Velasquez said Marcos was on track to attaining a single-digit poverty rate by 2028 with the country’s current good economic performance.
“Hopefully by the end of President Marcos’ administration, our povery rate will be below 10 percent at single digit. So, we’re on track actually to bring down poverty to single digit,” Velasquez, the chief economist of the Department of Finance, said during the Saturday news forum in Quezon City.
Among the economic indicators Velasquez cited included the country’s second quarter gross domestic product growth, with the Philippine economy expanding to 6.3 percent from the first quarter’s 5.8 percent.
She said investments and construction recorded marked increases as the government aggressively funds big ticket infrastructure projects to push the Build Better More program.
But spending among Filipino consumers remains conservative, Velasquez said.
She however expects aggressive spending because of good employment figures and remittances from overseas Filipino workers.
“It seems low because don’t you remember two years ago, when our inflation was actually high at 6 percent, it’s 5.8 percent last year. But now it’s going down so hopefully it’ll be better, at least the outlook in terms of household consumption,” she said.
The Philippines’ unemployment figures are also okay, Velasquez said, adding the latest unemployment number was at 3.1 percent compared with the pre-pandemic record of around 5.1 percent.
Last July, the National Economic and Development Authority reported that despite experiencing domestic and external challenges, the Philippines has made remarkable strides in reducing poverty levels between 2021 and 2023, marking significant progress toward the government’s ambitious target of reducing poverty incidence to a single-digit level by 2028.
The PSA released last month the 2023 Full Year Official Poverty Statistics, showing the poverty incidence among the population significantly dropped to 15.5 percent from 18.1 percent in 2021.
Political noise
Meanwhile, the Finance official assured the public that ongoing political issues are not affecting the country’s economic performance.
Velasquez said that investor confidence has not waned despite the growing noise in the political arena.
She cited the recent upgrade of the country from Japan’s largest credit rating agency, affirming growing and strengthening economy.
The Rating and Investment Information, Inc. upgraded the Philippines’ credit rating to “A-” with a stable outlook from “BBB+” last year.
At present, the Philippines holds an “A-” rating from the Japan Credit Rating Agency, “BBB” from Fitch Ratings, “Baa2” from Moody’s Ratings, and “BBB+” from Standard & Poor’s Global Ratings.
“Actually, there has been no effect for a long time now. Investors could differentiate economic from political,” Velasquez said.
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