Philippines Country Risk Report

Published 22 July 2015 | Quarterly

  • 52 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
$1,195.00
Philippines Country Risk Report

Core Views

* While the Philippines' real GDP growth slowed to 5.2% year-on-year (y-o-y) in Q115 from 6.6% in Q414, owing largely to export weakness, we nevertheless expect strong domestic demand to provide a measure of support for the economy. As such, we maintain our forecast for the country's real GDP growth to come in at a strong 6.0% in 2015. That said, a larger-than-anticipated slowdown in exports would pose a downside risk to our forecast.

*The Philippines' ongoing growth-inflation sweet spot informs our forecast for the Bangko Sentral ng Pilipinas (BSP) to keep its benchmark interest rate unchanged at 4.00% in 2015. In combination with positive real interest rates, we forecast the Philippine peso to remain resilient against the US dollar. Meanwhile, yields will remain anchored amid a benign inflationary environment.

*With government revenue growth outstripping that of expenditure, and public debt continuing to decline as a share of GDP, we maintain our positive outlook for the Philippines' fiscal position. As such, we forecast a narrowing of the country's budget deficit, from 0.6% of GDP in 2014 to 0.4% and 0.2% in 2015 and 2016, respectively.

*The Philippine peso is set for modest weakness following a break of key technical support level at PHP45.00/USD. Accordingly, we now forecast the peso to average PHP45.40/USD (from PHP44.60/USD previously) in 2015 and PHP46.53/USD (from PHP44.80/USD) in 2016. That said, we do not expect significant peso weakness, as strong economic growth, an improving external position and continued financial inflows should provide a measure of support for the currency.

Major Forecast Changes

*We downgraded our average peso forecast to PHP45.40/USD in 2015 (from PHP44.60/USD previously) and PHP46.53/USD in 2016 (from PHP44.80/USD).

*We forecast the Philippines' real GDP growth to average 5.8% over the period from 2015 to 2024, up from our initial forecast of 5.2%.

Key Risks To Outlook

*The Philippines remains at risk of substantial...

Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Foreign Policy
8
Japan-Philippines: Defence Ties Significant, But Not 'Game-Changing'
8
Table: Political Overview
8
Long-Term Political Outlook
10
Prospects For Improving Governance
10
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Export Slowdown A Key Risk To Growth
14
Table: Economic Activity
14
Fiscal Policy
15
Positive Fiscal Story To Continue
15
Table: Fiscal Policy
15
Monetary Policy
17
Growth-Inflation Sweet Spot To Keep Rates On Hold
17
Table: Monetary Policy
17
Exchange Rate Policy
18
PHP: Break Of Support A Bearish Sign
18
Table: Current Account
19
Table: CURRENCY FORECAST
20
Chapter 3: 10-Year Forecast
21
The Philippine Economy To 2024
21
Potential For Higher Investment Rate To Sustain Economic Growth
21
Table: Long-Term Macroeconomic Forecasts
21
Chapter 4: Operational Risk
25
SWOT Analysis
25
Operational Risk Index
25
Operational Risk
26
Table: Asia - Operational Risk
26
Market Size And Utilities
27
Table: Asia - Market Size & Utilities Infrastructure
28
International Security Risk
32
Table: Asia - Interstate Security Risks
32
Chapter 5: Key Sectors
35
Pharmaceuticals & Healthcare
35
table: Pharmaceutical Sales, Historical Data & Forecasts
36
table: Healthcare Expenditure Trends, Historical Data & Forecasts
38
table: Government Healthcare Expenditure Trends, Historical Data & Forecasts
38
table: Private Healthcare Expenditure Trends, Historical Data & Forecasts
38
Telecommunications
40
table: Telecoms Sector - Mobile - Historical Data & Forecasts
41
table: Telecoms Sector - Wireline - Historical Data & Forecasts
42
Other Key Sectors
43
table: Oil & Gas Sector Key Indicators
43
table: Defence & Security Sector Key Indicators
43
table: Infrastructure Sector Key Indicators
43
table: Food & Drink Sector Key Indicators
44
table: Autos Sector Key Indicators
44
table: Freight Key Indicators
44
Chapter 6:BMI Global Macro Outlook
45
Global Outlook
45
Event Risk Mounting But Manageable
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

The Philippines Country Risk Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Philippines and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Philippines' economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Philippines' economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Philippines' country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in Philippines, including currency volatility, the commodity price boom and protectionist policies.

The Philippines Country Risk Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Philippine economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Philippines through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Philippines Country Risk Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:

Data:

  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Philippines and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Philippines, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Philippines over the next 5-years?

BMI's Philippines country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Philippine Market - Political Strengths, Weaknesses, Opportunities and Threats facing Philippines.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for Philippines' risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Philippines' risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for Philippines, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of Philippines' business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

Key Sector Outlook

Which industry sectors in Philippines will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Philippines' high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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