Business Monitor International


Philippines Business Forecast Report

Published 20 October 2014

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

Core Views

 We continue to hold a positive outlook for the Philippine economy, and are forecasting for real GDP growth to come in at 6.3% in 2014. However, tighter monetary policy in 2015 is likely to cause real GDP growth to ease to 6.0%.

•We continue to see the Bangko Sentral ng Pilipinas raise its benchmark interest rate by another 50 basis points to 4.50% in 2015, owing to continued price pressures emanating from a potential electricity shortage in Luzon and likely interest rate normalisation in the US in the coming year.

•Ongoing fiscal consolidation efforts by the Philippine government will ensure a sustainable budgetary trajectory over the coming years. We forecast for the country's budget deficit to narrow to 0.8% of GDP in 2014 and 0.6% in 2015, from 1.4% in 2013. However, the lacklustre fiscal spending will be a drag on growth.

•The Philippine peso should stay largely resilient despite USD strength. We are forecasting for the unit to average PHP44.50/USD in 2014 and PHP43.71/USD in 2015. A combination of still-positive economic growth outlook, strong foreign inflows and an improving external position should provide structural support to the peso.

Major Forecast Changes

•We have revised our 2015 benchmark interest rate forecast to 4.50%, from our previous estimate of 4.00%. 

•We have revised our forecast for the Philippine peso to average PHP44.50/USD in 2014, from our earlier estimate of PHP44.00/USD.

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 should they be more severe than expected.

•The largest risk to our medium-term peso view comes from the potential for a devaluation of the Chinese yuan by the People's Bank of China in a bid to support...

Table of Contents

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
Forging Stronger Ties With Europe
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
Q214 Rebound Presages Continued Growth Momentum
14
TABLE: Economic Activity
14
Fiscal Policy
15
Lacklustre Fiscal Spending To Drag On Growth
15
TABLE: Fiscal Policy
16
Monetary Policy
17
Additional Rate Hikes In 2015 On The Cards
17
TABLE: Monetary Policy
18
Exchange Rate Policy
19
Peso To Stay Largely Resilient Despite Headwinds
19
TABLE: CURENCY FORECAST
19
TABLE: Current Account
20
Chapter 3: 10-Year Forecast
21
The Philippine Economy To 2023
21
Uncovering A Forgotten Gem
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
TABLE: Asia - Transport Network Risk
28
Economic Openness
32
TABLE: Asia - Economic Openness
33
TABLE: Top Five Trade Partners - Product Imports (USDmn)
34
TABLE: Top Five Products Exported (USDmn)
34
Chapter 5: Key Sectors
37
Oil & Gas
37
TABLE: Headline Forecasts
37
TABLE: Oil Production
38
TABLE: Oil Production
38
TABLE: Gas Production
39
TABLE: Gas Production
39
Infrastructure
40
TABLE: Construction & Infrastructure Industry Data
40
TABLE: Construction And Infrastructure Industry Data
41
TABLE: Competiti venes Of Philipi nes 's Infrast ructu re
42
TABLE: Consortiums Interested In The CALA Expressway
42
Other Key Sectors
45
TABLE: Pharma Sector Key Indicators
45
TABLE: Telecoms Sector Key Indicators
45
TABLE: Freight Key Indicators
45
TABLE: Food & Drink Sector Key Indicators
46
TABLE: Autos Sector Key Indicators
46
TABLE: Defence & Security Sector Key Indicators
46
Chapter 6: BMI Global Assumptions
47
Global Outlook
47
Big Emerging Market Revisions
47
Table: Global Assumptions
47
Table: Developed States, Real GDP GrowtH, %
48
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
48
Table: Emerging Markets, Real GDP Growth, %
49

The Philippines Business Forecast 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 Business Forecast 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 Business Forecast 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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Testimonials

The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express