1. Market Research
  2. > Philippines Business Forecast Report Q4 2014

Philippines Business Forecast Report Q4 2014

  • July 2014
  • -
  • Business Monitor International
  • -
  • 44 pages

Core Views
The Philippines' decision to seek international arbitration in its maritime dispute with China will raise tensions between the two countries, and could accelerate US efforts to 'pivot' towards Asia. The dispute also increases the risk of Beijing imposing economic sanctions on the Philippines, which would pose downside risks for our 6.3% real GDP growth forecast in 2014. We continue to hold a positive outlook for the economy, and maintain our forecast for real GDP growth of 6.3% in 2014, as investment is likely to pick up and the export sector should see a modest rebound this year. Rising inflationary pressures have narrowed the scope for continued accommodative monetary policy in the Philippines. As such, we maintain that the Bangko Sentral ng Pilipinas (BSP) will raise its benchmark interest rate by a total of 50 basis points to 4.00% by end-2014.

E ffective fiscal reforms by the Philippine government will lead to a continued improvement in the country's debt metrics and allow for fiscally funded infrastructure projects. We are forecasting the budget deficit to narrow to 0.8% of GDP in 2014, while public debt as a share of GDP to decline to 46.9%.

Major Forecast Changes
We have upgraded our 2014 budget deficit forecast from 1.4% of GDP to 0.8% of GDP, owing to improving tax revenue collection and prudent expenditure management.

Table Of Contents

Philippines Business Forecast Report Q4 2014
Executive Summary.... 5
Core Views..5
Chapter 1: Political Outlook.. 7
SWOT Analysis.... 7
BMI Political Risk Ratings. 7
Domestic Politics .... 8
Sino-Philippine Maritime Dispute: Geopolitical And Economic Implications8
The Philippines' decision to seek international arbitration in its maritime dispute with China will raise tensions between the two countries,
and could accelerate US efforts to 'pivot' towards Asia. The dispute also increases the risk of Beijing imposing economic sanctions on
the Philippines, which would pose downside risks for our 6.3% real GDP growth forecast in 2014.
Table: Political Overview ...8
Long-Term Political Outlook.. 9
Prospects For Improving Governance..9
The Philippines faces a number of political challenges over the coming years that, if handled successfully, could improve governance.
However, given low income levels and high levels of inequality, we expect the political scene to remain vulnerable to intermittent
instances of turmoil.
Chapter 2: Economic Outlook.. 13
SWOT Analysis.. 13
BMI Economic Risk Ratings. 13
Economic Activity.. 14
Still Positive Despite Disappointing Q114 GDP Print..14
The Philippines' real GDP growth fell to 5.7% year-on-year in Q114, missing Bloomberg consensus estimates of 6.4% as investment
faltered. We nevertheless maintain a positive outlook on the economy, and maintain our forecast for real GDP growth of 6.3% in
2014, as investment is likely to pick up, domestic demand will remain strong, and the export sector should see a modest rebound this
year.
table: Economic Activity ...14
Fiscal Policy.. 15
Fiscal Position To Remain On A Sound Footing15
The Philippine government's fiscal reforms to bolster their tax revenues and keep expenditures in check have been effective, which will
in turn lead to a continued improvement in the country's debt metrics and allow for fiscally funded projects. We forecast the fiscal deficit
to narrow to 0.8% of GDP in 2014, while public debt as a share of GDP to decline to 46.9%, from 49.2% in 2013.
table: Fiscal Policy ...16
Monetary Policy. 17
Rate Hikes In Sight Amid Rising Inflation17
Rising inflationary pressures have narrowed the scope for continued accommodative monetary policy in the Philippines. As such, we
maintain that the Bangko Sentral ng Pilipinas will raise its benchmark interest rate by a total of 50 basis points to 4.00% by end-2014.
The country's positive growth outlook will also provide room for rate hikes.
table: Monetary Policy.17
Exchange Rate Policy 19
Peso To Retain Recent Gains....19
We are neutral towards the Philippine peso over the coming months, and expect the currency to retain its recent gains against the
dollar, owing to the country's still-positive growth outlook, declining external debt and returning net portfolio inflows. Any currency
weakness will also likely be limited by the strong reserves that the central bank has. As such, we maintain our end-2014 and 2014
average forecasts of PHP43.50/USD and PHP44.00/USD respectively. That said, further weakness in the Chinese yuan poses a
downside risk to our outlook.
table: CURRENCY FORECAST19
table: Current Account ....20
Chapter 3: 10-Year Forecast 21
The Philippine Economy To 2023... 21
Uncovering A Forgotten Gem....21
The Philippines holds significant economic growth potential and has begun to come into the investment spotlight as a result. Although
the country has in the past been hampered by political instability and poor investor perception, we believe President Benigno Aquino
III has been able to make progress on both fronts. Moreover, consumerism is expected to pick up in a big way towards the end of the
decade as income levels rise.
table: Long-Term Macroeconomic Forecasts..21
Chapter 4: Business Environment 25
SWOT Analysis.. 25
BMI Business Environment Risk Ratings 25
Business Environment Outlook 26
Institutions.... 26
Table: BMI Business And Operation Risk Ratings...26
Table: BMI Legal Framework Rating...27
Tab le: Lab our Forc e Qua lit y.28
Infrastructure 29
TABLE: ASIA - ANNUAL FDI INFLOWS29
Market Orientation.. 30
TABLE: Top Export Destinations (USDMN)....30
Operational Risk 31
Chapter 5: Key Sectors.. 33
Pharmaceuticals and Healthcare .. 33
table: Pharmaceutical Sales, Historical Data and Forecasts.34
table: Healthcare Expenditure Trends, Historical Data and Forecasts 35
table: Private Healthcare Expenditure Trends, Historical Data and Forecasts.... 36
Telecommunications... 37
table: Government Healthcare Expenditure Trends, Historical Data and Forecasts... 37
table: Telecoms Sector - Mobile - Historical Data and Forecasts. 38
TABLE: Telecoms Sector - Wireline - Historical Data and Forecasts (Philippines 2011-2018)... 39
Other Key Sectors.. 41
table: Oil and Gas Sector Key Indicators.41
table: Defence and Security Sector Key Indicators....41
table: Infrastructure Sector Key Indicators.41
table: Food and Drink Sector Key Indicators...42
table: Autos Sector Key Indicators.42
table: Freight Key Indicators....42
Chapter 6: BMI Global Assumptions. 43
Global Outlook... 43
Global Recovery Still On Track..43
Table: Global Assumptions....43
Table: Developed States, Real GDP GrowtH, %.44
Table: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %.. 44
Table: Emerging Markets, Real GDP Growth, %45

View This Report »

Get Industry Insights. Simply.

  • Latest reports & slideshows with insights from top research analysts
  • 24 Million searchable statistics with tables, figures & datasets
  • More than 10,000 trusted sources
24/7 Customer Support

Talk to Ahmad

+1 718 618 4302

ref:plp2014

Reportlinker.com © Copyright 2016. All rights reserved.

ReportLinker simplifies how Analysts and Decision Makers get industry data for their business.