Philippines Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Philippines Country Risk Report
Product Price
$1,195.00

Core Views

* Real GDP growth in the Philippines accelerated from 6.0% y-o-y in Q315 to 6.3% in Q415, as the booming construction sector continued to power the economy forward. Domestic resilience should persist, informing our expectations for the Philippine economy to remain on a sound footing despite ongoing external challenges. Accordingly, we are forecasting real GDP growth to come in at 6.0% and 5.9% in 2016 and 2017, respectively.

* We retain our expectations for the Bangko Sentral Pilipinas (BSP) to keep its benchmark interest rate on hold at 4.00% throughout 2016, as the balance between modest inflation and strong growth remains ideal. Risks to this forecast are roughly in balance, including a prolonged and worse than expected El Nino (which could potentially lead to rate hikes to curb inflationary pressures) and a stagnation in growth as a result of political risk, which could lead the central bank to cut.

* The Philippines' May presidential elections will be a test of the country's improved political risk framework that was put into place by the outgoing Aquino administration. While Mar Roxas and Grace Poe pose little threat to the policy continuity outlook, the same cannot be said for Rodrigo Duterte and Jejomar Binay. We believe that Poe and Roxas would largely carry on the economic reform work championed by Aquino while also running relatively clean governments, while Duterte would focus much more on cracking down on crime and corruption. The long list of corruption allegations against Binay could result in legal questions surrounding his presidency, should he be elected.

Major Forecast Changes

*We have revised our end-2016 forecast on the Philippine peso stronger to PHP47.00/USD, versus PHP48.20 previously, following a prolonge period of US dollar weakness.

Key Risks To Outlook

*The Philippines remains at risk of substantial hot money outflows in the event of acute global credit or financial market stresses.

*Growth slowdowns in both China and Japan, to which the Philippines is heavily exposed in both investment and trade terms, could undermine the country's strong domestic growth story.

*The potential for a further devaluation in the Chinese yuan by the People's Bank of China (PBOC) so as to support China's economy could weigh on the Philippine peso. A weaker yuan could see the BSP allow for a further weakening of the peso in order to maintain the competitiveness of Philippine exports relative to Chinese exports.

Macroeconomic Forecasts (Philippines 2014-2017)
Indicator 2014 2015e 2016f 2017f
National Sources/BMI
Nominal GDP, USDbn 285.8 300.3 312.6 345.1
Real GDP growth, % y-o-y 6.1 5.8 6.0 5.9
Consumer price inflation, % y-o-y, eop 2.7 1.5 2.5 4.0
Exchange rate PHP/USD, eop 44.72 46.91 47.00 46.00
Budget balance, % of GDP -0.6 -0.4 -0.3 0.1
Current account balance, % of GDP 3.8 2.8 3.5 3.5
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Domestic Resilience To Sustain Strong GDP Growth
8
GDP By Expenditure Outlook
9
Economic Structure
9
TABLE : ECONOMIC ACTIVITY
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
9
TABLE : FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy
10
Yields To Rise Modestly On Sustained Growth, Fed Liftoff
10
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
Monetary Policy
13
BSP To Stand Pat On Domestic Resilience, Muted inflation
13
Monetary Policy Framework
14
Currency Forecast
15
PHP: Peso Risks Rising Amid Equity Weakness
15
TABLE: CURRENCY FORECAST
15
Outlook On External Position
18
TABLE: MAIN IMPORT AND EXPORT PARTNERS
18
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
18
TABLE: MAIN IMPORTS AND EXPORTS
18
Chapter 2: 10-Year Forecast
21
The Philippine Economy To 2025
21
Potential For Higher Investment Rate To Sustain Economic Growth
21
TABLE: LONG-TERM MACROECONOMIC FORECASTS
21
Chapter 3: Political Outlook
25
SWOT Analysis
25
BMI Political Risk Index
25
Domestic Politics
26
China Relations Face Mounting Headwinds Amid Maritime Dispute
26
TABLE: POLITICAL OVERVIEW
26
Long-Term Political Outlook
28
Stable Politics For Now, But Political Challenges Remain
28
Chapter 4: Operational Risk
31
SWOT Analysis
31
Operational Risk Index
31
Operational Risk
32
TABLE: OPERATIONAL RISK SCORE
32
Trade Procedures And Governance
33
TABLE: BREAKDOWN OF DOCUMENTATION
33
TABLE: TRADE DOCUMENTATION, COST AND DURATION
33
TABLE: ASIA - TRADE PROCEDURES AND GOVERNANCE RISK
34
Vulnerability To Crime
35
Chapter 5: BMI Global Macro Outlook
39
Global Macro Outlook
39
Unfinished Business In 2016
39
TABLE: GLOBAL ASSUMPTIONS
39
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
40
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
40
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
41
TABLE: PHILIPPINES - MACROECONOMIC DATA & FORECASTS
43

Assess your risk exposure in Philippines with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Philippines with confidence.

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