Country Forecast Philippines

The resounding victory won by Benigno Aquino in the May 2010 presidential election suggests that the Philippines is on course for a period of relative political stability. But the president faces risks to his hold on power during his six-year term. His attempts to hold his predecessor, Gloria Macapagal Arroyo, to account for alleged corruption have made enemies of those who benefited from her administration's patronage. Real GDP growth slowed to 3.7% in 2011, from 7.6% in 2010, and the Economist Intelligence Unit forecasts a further slowdown this year, to 3.4%. But growth will pick up to an average of 5.5% a year in 2013-16. We expect the budget deficit to widen to the equivalent of 2.5% of GDP in 2012, from 2% in 2011, before narrowing again to 2.2% on average in 2013-16. Although the trade account will remain in deficit in the next five years, the current account will continue to post surpluses. Remittances will remain an important source of foreign exchange.

In a trial that commenced in December 2011, the Supreme Court chief justice, Renato Corona, was found guilty by the Senate (the upper house of Congress) of failing to disclose his assets. Mr Aquino has 90 days to chose a successor for Mr Corona.

In its quarterly inflation report, the Bangko Sentral ng Pilipinas (the central bank) said that although the inflation environment is "manageable" at present and that the improving outlook for the global economy supports the maintenance of its current monetary policy stance, there is risk of greater upward pressure on inflation owing to high oil prices.

Country Forecast Philippines

Philippines at a glance: 2012-16
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast

Philippines--highlights: Political outlook

Philippines--highlights: Demographic outlook

Philippines--highlights: Business environment outlook

Philippines--highlights: Economic outlook

Philippines--highlights: Market opportunities

Philippines--highlights: Long-term outlook

Fact sheet

Political outlook: Political forces at a glance

Political outlook: Political stability
Insurgencies still pose a threat to political stability

Political outlook: Political and institutional effectiveness
Official corruption will remain widespread at all levels

Political outlook: Election watch

Political outlook: Key players to watch
Benigno Aquino
Jejomar Binay
Gloria Macapagal Arroyo
Juan Ponce Enrile
Joseph Estrada
Gaudencio Rosales

Political outlook: International relations

Demographic assumptions
Population growth will remain relatively rapid
The Philippines will continue to export its surplus labour

Business environment outlook: Business environment rankings
The Philippines scores poorly on political effectiveness

Business environment outlook: The Philippines' business environment at a gl
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
Taxes
Financing
The labour market
Infrastructure

Business environment outlook: Macroeconomic environment

Business environment outlook: Policy towards private enterprise and competi
Pro-market policies will remain in place, but regulatory concerns will persist

Business environment outlook: Policy towards foreign investment
A number of factors will continue to constrain foreign investment
Question-marks remain over foreign investment in the mining sector

Business environment outlook: Foreign trade and exchange controls
The Philippine peso will continue to display significant volatility

Business environment outlook: Taxes
Mr Aquino will focus on combating tax evasion

Business environment outlook: Financing
The authorities plan to meet the Basel III requirements ahead of schedule

Business environment outlook: The labour market
English-language proficiency will remain a competitive advantage

Business environment outlook: Infrastructure
Substandard infrastructure will continue to hold back business

Economic forecast: Policy trends

Economic forecast: Fiscal policy

Economic forecast: Monetary policy

Economic forecast: International assumptions

Economic forecast: Economic growth

Economic forecast: Sectoral trends

Economic forecast: Inflation

Economic forecast: Exchange rates

Economic forecast: External sector

Economic forecast: Foreign direct investment in Philippines
Stocks and flows
Origin and distribution
Determinants
Impact
Potential

Market opportunities: Market outlook
Personal disposable income will continue to rise

Market opportunities: Consumer expenditure
Demand for telecoms services is likely to increase strongly in 2012-16

Market opportunities: Social indicators and living standards

Long-term outlook: The long-term outlook
The English-language proficiency of the labour force is an important asset
The Philippine economy will remain dependent on workers' remittances
Slow institutional change will act as a brake on economic growth

Long-term outlook: Methodology for long-term forecasts
Growth projections
Definitions of variables
The independent variables include:
Summary of findings
Productivity growth

Data summary: Global outlook

Data summary: Gross domestic product, current market prices

Data summary: Gross domestic product, at constant prices

Data summary: Gross domestic product by sector of origin

Data summary: Growth and productivity

Data summary: Economic structure, income and market size

Data summary: Fiscal indicators

Data summary: Monetary indicators

Data summary: Employment, wages and prices

Data summary: Current account and terms of trade

Data summary: Foreign direct investment

Data summary: External debt

Data sources and definitions
Global data
Domestic data
Abbreviations

Guide to the business rankings model
Outline of the model
Calculating the rankings
Measurement and grading issues

Indicator scores in the business rankings model

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