OREANDA-NEWS. The victory of Rodrigo Duterte in the Philippines presidential election has no immediate impact on the country's sovereign rating or outlook, Fitch Ratings says. As clarity emerges over the new administration's policies, our sovereign ratings assessment will continue to focus on the sustainability of economic growth and improvements in governance.

Duterte received close to 40% of the vote, according to the unofficial tally, and his closest rivals, Mar Roxas and Grace Poe, have conceded defeat. This means Duterte, a former member of the House of Representatives and long-serving mayor of Davao City, is likely to take office by end-June. The margin of his victory is notable, given that opinion polls showed no clear front-runner until relatively late in the election campaign.

Duterte's campaign did not feature detailed economic plans, and focussed instead on tackling crime and promoting social justice. Duterte has said that he lacks economic expertise and could adopt the policies of opponents such as Roxas and Poe, who had promised to continue the reforms of the outgoing Aquino administration.

This appeared to be borne out with the release of an eight-point economic agenda on 12 May that commits to "maintain the current macroeconomic policies", continue to improve tax collection, address infrastructure bottlenecks, and promote foreign investment and competitiveness. It also reiterates campaign pledges to boost education and rural development. We expect more detail to emerge as cabinet appointments are made, or in the state of the nation address expected on 25 July.

Our affirmation of the Philippines 'BBB-'/Positive sovereign rating on 8 April reflected economic growth and fiscal and external finances and improved governance under President Benigno Aquino. We forecast real GDP growth of 5.9% this year, close to the 2010-2015 average of 6.2% and well above the 'BBB' category median of 2.6%.

We think strong fundamentals will support growth momentum if current macroeconomic policy settings are broadly maintained. China's slowdown has seen net exports drop, but remittance flows have supported private consumption, as well as helping maintain a current account surplus. At close to 18% of GDP, Philippines' estimated net external creditor position for 2016 contrasts with the 'BBB' median's net debtor position of 5.7% of GDP.

As we noted in our April affirmation, continued strong growth without the emergence of imbalances - such as widening fiscal deficits - would be credit positive, as would evidence that the improvement in governance standards administration can be sustained following a change in government.

Governance standards and competitiveness indicators as measured by international organisations, showed steady improvement through the Aquino administration. Global competitiveness, as ranked by the World Economic Forum, has risen, and indicators for corruption, transparency and economic freedom have also improved substantially.