1. Market Research
  2. > Energy & Environment
  3. > Energy
  4. > Oil and Gas Energy Market Trends
  5. > Philippines Country Risk Report Q4 2016

Philippines Country Risk Report Q4 2016

  • July 2016
  • -
  • Business Monitor International
  • -
  • 45 pages

Core Views

The Philippine economy is well positioned to maintain its stronggrowth trajectory over the coming quarters on the back of boomingdomestic services and construction sectors, and we maintain ourforecast for real GDP growth to come in at 6.0% in 2016. Q116 GDPdata marked a continuation of the economy’s domestic resiliencein the face of a difficult external environment, with real GDP growthaccelerating to 6.9% following a 6.3% pace in Q415.We expect the Bangko Sentral Pilipinas (BSP) to keep its newbenchmark interest rate on hold at 3.00% throughout the remainderof 2016, as the balance between modest inflation and strong growthremains ideal. Risks to this forecast are roughly in balance, includinga prolonged and worse than expected El Nino (which could potentiallylead to rate hikes to curb inflationary pressures) and a stagnation ingrowth as a result of political risk, which could lead the central bankto cut.Philippine President Rodrigo Duterte, who was sworn in on June 30,is set to shake up both the economic and political environment inthe Philippines over the next six years. A Duterte presidency posesconsiderable risks to the Philippines’ relatively sanguine outlook,chiefly because the outgoing Aquino administration ushered in aperiod of resurgence in the previously languid Philippine economy.In view of the associated uncertainties, we have downgraded thePhilippines’ short-term political risk score to 66.3, from 68.8 previously.Major Forecast ChangesThe Philippine peso has come under pressure from the UK’s shockdecision to leave the EU on June 24, and we believe that the currencywill experience continued volatility over the near-term. At the sametime, the peso’s technical outlook is poor, suggesting a continueddepreciation in the face of strong technical resistance. As such, wehave downgraded our end-2016 forecast on the peso to PHP47.97/USD, reflecting our expectations for the currency to experience additionaldepreciation over the next three-to-six months.

Table Of Contents

Philippines Country Risk Report Q4 2016
Executive Summary. 5
Core Views5
Major Forecast Changes..5
Key Risks..5
Chapter 1: Economic Outlook 7
SWOT Analysis.. 7
BMI Economic Risk Index 7
Economic Growth Outlook. 8
Duterte Risks Keep GDP Forecast Anchored Despite Strong Q1168
We remain sanguine on the Philippine economy, which should continue to achieve strong growth on the back of booming services and
construction sectors. However, Rodrigo Duterte's victory in May 9's presidential elections represents a salient risk to the Philippines'
economic outlook, and for this reason we have kept our 2016 real GDP forecast anchored at 6.0%.
GDP By Expenditure Outlook 9
TABLE: ECONOMIC ACTIVITY9
TABLE: PRIVATE CONSUMPTION FORECASTS.9
TABLE: GOVERNMENT CONSUMPTION FORECASTS..9
TABLE: FIXED INVESTMENT FORECASTS.10
TABLE: NET EXPORTS FORECASTS..10
Fiscal Policy And Public Debt Outlook 10
Expansionary Fiscal Plans Could Yield Dividends..10
President-elect Rodrigo Duterte's nominee for Budget Secretary Ben Diokno has come out firing with a plan to raise the government's
fiscal deficit to 3.0% of GDP (versus 0.9% in 2015). Despite the risks inherent in a higher fiscal deficit, a substantially stronger spending
programme would have a positive structural impact as long as the government allocates the funds to productive areas such as
infrastructure, agriculture, and education.
TABLE: MACROECONOMIC FORECASTS11
Structural Fiscal Position. 12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES..12
TABLE: FISCAL AND PUBLIC DEBT FORECASTS..12
External Trade and Investment Outlook.. 13
Export Outlook Subdued, But External Surplus Intact..13
The Philippines will face continued export headwinds over the coming quarters owing to the ongoing slowdown in China and tepid
growth in Japan, and we have downgraded the country's total export growth forecast for 2016 to 1.7% (versus 6.7% previously).
Nevertheless, the country's external surplus will remain intact owing to a structural current account surplus and strong FDI inflows, and
we forecast the former to come in at 3.1% of GDP in 2016.
Outlook On External Position. 15
TABLE: CURRENT ACCOUNT BALANCE FORECASTS 15
TABLE: MAIN IMPORT AND EXPORT PARTNERS.. 15
TABLE: CAPITAL and FINANCIAL ACCOUNT BALANCE..16
TABLE: MAIN IMPORTS AND EXPORTS16
Monetary Policy.. 16
Potential To Ease RRR Following Introduction Of Interest Rate Corridor.16
The BSP's planned adoption of an interest rate corridor regime in June should have limited effects in terms of near-term monetary
conditions, but will help the central bank to more directly manage short-term interest rates and interbank lending markets once
established. Meanwhile, a modest inflation outlook and downside risks emanating from the election of President Rodrigo Duterte in May
will likely spur the central bank to adopt a slightly more dovish monetary policy over the remainder of the year in the form of cuts to its
reserve requirement ratio (RRR).
Monetary Policy Framework 17
TABLE: MONETARY POLICY FORECASTS.17
Currency Forecast. 18
Technicals, External Volatility To Weigh On Peso18
The Philippine peso will depreciate towards PHP49.00/USD by end-2016 as external volatility related to the June 24 Brexit vote and
Chinese yuan depreciation weigh on the currency. Depreciatory momentum will likely carry over into 2017, but weakness will be limited
by the currency's strong structural position.
TABLE: BMI CURRENCY FORECAST..18
Chapter 2: 10-Year Forecast. 21
The Philippine Economy To 2025 21
Potential For Higher Investment Rate To Sustain Economic Growth..21
Ongoing political and economic reforms, as well as increasing foreign investor interest, will help to speed up investment growth in the
Philippines. This will in turn enable the country to sustain its strong growth trajectory over the coming years. As such, we forecast the
Philippines' real GDP growth to average 5.8% over the period from 2016 to 2025, up from our initial forecast of 5.2%.
TABLE: LONG-TERM MACROECONOMIC FORECASTS.21
Chapter 3: Political Outlook. 25
SWOT Analysis 25
BMI Political Risk Index. 25
Domestic Politics.. 26
The Bull Case For A Strongman Presidency26
The risks associated with Rodrigo Duterte's presidency are myriad, but a departure from the Philippines' status quo does not necessarily
entail a negative outcome for the economy. Should Duterte succeed in cutting crime rates without overstepping his executive privilege,
while simultaneously bolstering fiscal efficiency, liberalising foreign investment laws, and cutting through the country's bloated
bureaucracy, this could take the Philippines' structural growth rate higher still.
TABLE: POLITICAL OVERVIEW .26
Long-Term Political Outlook.. 27
Stable Politics For Now, But Political Challenges Remain.27
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 4: Operational Risk. 31
SWOT Analysis 31
Operational Risk Index.. 31
Operational Risk. 32
TABLE: OPERATIONAL RISK SCORE. 32
Market Size And Utilities 33
TABLE: ASIA - MARKET SIZE AND UTILITIES.. 34
Labour Costs 37
TABLE: LABOUR REGULATIONS GOVERNING FLEXIBILITY OF WORKFORCE.. 37
Chapter 5: BMI Global Macro Outlook 41
Global Macro Outlook. 41
Brexit Risk Casts A Long Shadow..41
TABLE: GLOBAL ASSUMPTIONS..41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %.. 43
TABLE: MACROECONOMIC DATA and FORECASTS. 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 Veronica

+1 718 514 2762

Purchase Reports From Reputable Market Research Publishers
Crude Oil Flow Improvers Market by Type, Application, Supply Mode - Global Forecast to 2021

Crude Oil Flow Improvers Market by Type, Application, Supply Mode - Global Forecast to 2021

  • $ 12000
  • Industry report
  • September 2016
  • by MarketsandMarkets

“Rise in crude oil production worldwide drives the COFI market” The global market size of COFI is estimated to reach USD 1.73 billion by 2021 from 1.32 billion in 2016, at a CAGR of 5.5%. Excessive ...

Filter Bags Market - Global Industry, Size, Share, Growth, Trends and Forecast 2016 - 2024

Filter Bags Market - Global Industry, Size, Share, Growth, Trends and Forecast 2016 - 2024

  • $ 7000
  • Industry report
  • September 2016
  • by Transparency Market Research

The filter bags market report provides an in-depth analysis of the global filter bag market for the period 2014 – 2024, wherein 2015 is the base year and the years from 2016 to 2024 is the forecast period. ...


ref:plp2016

Reportlinker.com © Copyright 2016. All rights reserved.

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