The Philippines would have to wait for investment grade

It will be some time before then, says analyst.

OCBC Treasury Research noted:

Following the upgrade by Moody’s on Monday, the big question naturally revolves around the potential upgrade to investment-grade for Philippines sovereign credit rating.

It should be noted that all 3 credit rating agencies currently maintain a stable outlook on Philippines’ rating, and thus, even as we are encouraged by the improvement in the country’s fundamentals over the past couple of years, we think that it will be some time before Philippines gets the investment-grade nod.

Growth is still very much volatile and dependent on the external sector and we look for GDP growth to be about 4.5-5.0% in 2012, with the peak likely seen in Q1.

Structurally, more substantial FDI flows will definitely need to be seen, as the current levels are still very much dwarfed when compared to OFW remittances, although we are encouraged by the fact that the share of OFW remittances in the country’s GDP has been falling.