World News

BPO Sector Contributes to PH Investment Grade Rating

Row of male and female call center representatives

Fitch Ratings recognized the Philippines’ business process outsourcing (BPO) sector as a factor for affirming its minimum investment grade rating with a positive outlook for the country.

The rating agency affirmed its BBB rating on the country based on a “consistent growth performance, a robust net external creditor position, and government debt levels,” according to a statement.

Those interested in setting up a business in the country should consider seeking help from a business process outsourcing service provider, as this type of company focuses on targeting potential growth opportunities in the Philippines without the added costs.

Investment Grade

Fitch’s affirmed rating might reflect the country’s strong growth potential, although it also warned that it would monitor the effect of the government’s ongoing anti-drug campaign to the economy, which it expects to maintain a 6.8% growth in terms of gross domestic product in 2017 from the previous year.

Other than BPO sector providing an economic boost, Fitch said that a consistent flow of remittances from abroad would continue to support the country’s current account. By contrast, Fitch pointed out some factors, such as a narrow government revenue base, that constrain the country’s ratings.

Upward Ratings

Despite some weak factors pointed out, the prospects for the country’s credit ratings remain positive. Karby Leggett, Standard Chartered Asia head of public, said that the Philippines is expected to buck a trend of declining ratings for other economies worldwide.

Leggett said that Fitch’s positive outlook on the country might lead to a rating upgrade, driven by the country’s better “overall macro fundamentals, sufficient external buffers, and very high-quality policy-making.”

Investment grade ratings determine the creditworthiness of a country, as well as how investors perceive it as a favorable destination for doing business. For the Philippines, maintaining its BBB rating is crucial, as investors frequently require this information before deciding whether to spend their money or not.