By Katherine K. Chan, A reporter
PHILIPPINES is among the the countrytries to be more vulnerable to climate-recredit risk such as bad weather endangers the country’s economy and fiscal stability, says Fitch Ratings.
“We expect climate risks to have a negative impact on the Philippine economy and public finances through various channels,” said Edward Parker, Fitch Ratings’ managing director and global head of research, sovereigns and senior executives. BusinessWorld by email.
“Unfortunately, more frequent and powerful storms and floods will cause loss of life, as well as damage to housing, infrastructure and businesses that will cause disruption to economic activity, the associated loss of tax revenue and rebuilding costs,” he added.
In a recent report, Fitch determined that the Philippines faces the highest pressure of credit risk by 2050.
“Fitch Ratings believes that the Philippines is one of the countries most exposed to physical climate risks, based on extensive data and climate projections available from Climate Vulnerability Signals,” said Mr. Parker. “It is more exposed to strong and powerful hurricanes and floods, and to a lesser extent to sea level rise.”
“We don’t see it as highly exposed to the risks of change,” he added.
In the Climate Vulnerability Signals (Climate.VS) report, Fitch analyzed the potential exposure of private credit profiles to climate-related risks from 2030 to 2050 by scoring them on a scale of 0 to 100, based on. from both physical and evolutionary risks.
Of the 119 countries analyzed, 60 countries, including the Philippines, are at risk of downgrading due to climate-related issues.
Physical hazards include heat waves and wildfires, droughts, hurricanes, floods and landslides, and rising sea levels.
Meanwhile, transition risks relate to fossil fuel dependence or the exposure of major fossil fuel producers to perceived declines in global demand for fossil fuels and green energy costs or carbon emission costs.
Based on the credit watchdog’s Climate.VS, the Philippines scored 55 out of 100 in terms of overall physical risk (VSp).
A VSP of 50 means that Fitch Ratings may lower a country’s credit rating by one notch.
Fitch ratings ended at ffrated the long-term “BBB” foreign currency rating and a “stable” outlook for the Philippines in April last year.
The “stable” outlook means the Philippines will likely maintain its rating over the next 18 to 24 months.
The Philippines usually experiences about 20 typhoons a year due to its proximity to the Pacific Ocean, according to the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA).
In 2025, 23 typhoons hit the country, affecting millions of Filipinos and leaving billions of pesos worth of damage across the country.
Mr. Fitch’s Parker said such climate risks could disrupt the local agricultural sector, which could lead to higher food prices and inflation.
“Government spending aimed at reducing some of the effects can also add to the budget deficit, other things being equal,” he added.
Given this, the country should invest in flood control and disaster preparedness programs to ensure that the economy has adequate resilience against climate-related risks, Mr. Parker.
“Investment in infrastructure such as marine and flood protection in sensitive areas and disaster preparedness capacity can help countries reduce the impact of climate risks,” he said. “They can also help address physical risks by carefully considering planning, development and land use.”
Last year, major floods exposed substandard or non-existent flood control projects across the country. These practices were also linked to officials of the Department of Public Works, lawmakers and contractors allegedly receiving compensation from the government’s infrastructure program.
Fitch Ratings previously told the paper that the graft scandal is also a risk to the Philippines’ credit rating because of its impact on political stability, the implementation of monetary policy, and business and consumer confidence.
PAGASA expects four to 11 typhoons to hit the country until July this year, with zero to 1 typhoon every month until April and one to two typhoons in May and June.
