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

Why you should buy this report

  • 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

* The Philippine economy is well positioned to maintain its strong growth trajectory over the coming quarters on the back of booming domestic services and construction sectors, and we maintain our forecast for real GDP growth to come in at 6.0% in 2016. Q116 GDP data marked a continuation of the economy's domestic resilience in the face of a difficult external environment, with real GDP growth accelerating to 6.9% following a 6.3% pace in Q415.

* We expect the Bangko Sentral Pilipinas (BSP) to keep its new benchmark interest rate on hold at 3.00% throughout the remainder of 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.

* Philippine President Rodrigo Duterte, who was sworn in on June 30, is set to shake up both the economic and political environment in the Philippines over the next six years. A Duterte presidency poses considerable risks to the Philippines' relatively sanguine outlook, chiefly because the outgoing Aquino administration ushered in a period of resurgence in the previously languid Philippine economy. In view of the associated uncertainties, we have downgraded the Philippines' short-term political risk score to 66.3, from 68.8 previously.

Major Forecast Changes

* The Philippine peso has come under pressure from the UK's shock decision to leave the EU on June 24, and we believe that the currency will experience continued volatility over the near-term. At the same time, the peso's technical outlook is poor, suggesting a continued depreciation in the face of strong technical resistance . As such, we have downgraded our end-2016 forecast on the peso to PHP49.00/USD, from PHP47.00/USD previously, reflecting our expectations for the currency to experience additional depreciation over the next three-to-six months.

Key Risks To Outlook

*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 deeper-than-expected depreciation of the Chinese yuan by the People's Bank of China (PBOC) would likely 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 285.8 300.3 306.0 330.9
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 49.00 48.00
Budget balance, % of GDP -0.6 -0.9 -0.8 -1.4
Current account balance, % of GDP 3.8 2.8 3.1 3.2
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
Economy Set To Maintain Pace In 2016
8
GDP By Expenditure Outlook
9
TABLE: ECONOMIC ACTIVITY
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal Policy
10
Fiscal Flexibility Allows For Strong Infrastructure, Defense Spending
10
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
External Trade And Investment Outlook
13
Current Account Set For Modest Improvement
13
Outlook On External Position
14
TABLE: MAIN IMPORT AND EXPORT PARTNERS
14
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
14
TABLE: MAIN IMPORTS AND EXPORTS
15
Monetary Policy
15
BSP To Remain On Hold Amid Favourable Growth-Inflation Dynamics
15
Monetary Policy Framework
16
Currency Forecast
17
PHP: Lofty REER To Keep Peso In Check
17
TABLE: BMI CURRENCY FORECAST
17
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
Presidential Election Update: Poe, Duterte Get Clear Of The Pack
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
Economic Openness
33
TABLE: TOP 5 IMPORT PARTNERS & PRODUCT IMPORTS, USDMN
33
TABLE: FREE TRADE AGREEMENTS
34
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
35
TABLE: REGULATORY RESTRICTIONS ON FOREIGN INVESTMENT
36
Availability Of Labour
38
TABLE: AVAILABILITY OF LABOUR
39
TABLE: LABOUR FORCE EMPLOYMENT BY SECTOR ('000)
40
Chapter 5: BMI Global Macro Outlook
45
Global Macro Outlook
45
Emerging Markets Nearing Inflexion Point
45
TABLE: GLOBAL ASSUMPTIONS
45
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
46
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
46
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
47
TABLE: MACROECONOMIC DATA & FORECASTS
49

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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  • The functionality to translate your online report into your choice of 10 languages - Arabic, Chinese, French, German, Italian, Japanese, Korean, Portuguese, Russian and Spanish
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