Philippines Business Forecast Q1 2007

Content

• Chapter 1: Political Outlook
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Political Risk Ratings
  • Domestic Political Outlook
  • Political Reform On Hold
  • Constitutional reform in the Philippines has been put on hold, with the Supreme Court ruling against President
  • Gloria Macapagal Arroyo's plan to hold a plebiscite for switching to a parliamentary form of government As such,
  • we see little scope for the successful implementation of charter change in the near future, and continue to expect
  • a rise in political noise in the run up to the country's congressional elections, in May 2007
  • Table: Philippines Cabinet List
• Chapter 2: Economic Outlook
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Economic Risk Ratings
  • Introduction
  • Economic Activity
  • Improved Outlook
  • Economic fundamentals in the Philippines remain solid, with continued strength in both the external and
  • domestic sectors While we remain more cautious than the Philippine authorities in our outlook for the economy,
  • we have raised our forecasts for real GDP growth in 2006 and 2007 to 52% and 49%, respectively, up
  • from 48% and 44% previously
  • Table: GDP By Expenditure (Change %)
  • Fiscal Policy
  • Marked Improvement, But Goals Optimistic
  • The health of public finances in the Philippines has improved considerably during 2006, with tax reforms
  • yielding higher revenue collection, while expenditure has been constrained by the government's inability
  • to pass a budget for 2006 However, following the encouraging progress in 2006, we see mounting fiscal
  • risks in 2007, and more work will need to be done to eliminate the deficit completely by 2008
  • Monetary Policy
  • Rate Cut Expected In Early 2007
  • Against a background of easing inflation, peso strength and lingering concerns over next year's economic
  • performance, BMI sees a growing case for monetary policy easing in the Philippines in early 2007 The move
  • by the central bank to introduce a tiered system for interest rates at the beginning of November can be seen
  • as a precursor to a rate cut, although we expect key policy rates to be kept on hold for the remainder of 2006
  • Table: Consumer Prices & Interest Rates
  • Exchange Rate Policy
  • Fundamentals Favour Gains
  • The Philippine peso has rebounded strongly after being battered during the Q206 EM correction Improving
  • economic fundamentals, ongoing fiscal reform and attractive yield have proven supportive, and should remain
  • so over the coming months As such, following a strong rally in Q306, we retain our positive medium-term
  • outlook on the peso, which continues to hover around levels last seen in mid-2002 Our end-2006 and
  • end-2007 targets remain PHP5000/US$ and PHP4900/US$, respectively
• Chapter 3: Special Report
  • BMI Sovereign Risk Ratings
  • What And Where Are The Risks?
  • Table: BMI Sovereign RIsk Ratings
  • Asia
  • Table: Asia Sovereign Ratings - Evolution of Ability to Pay
  • Table: Asia Sovereign Ratings - Evolution of Willingness to Pay
  • BMI Sovereign Ratings Index Methodology
• Chapter 4: Business Environment
  • BMI Core Scenario
  • SWOT Analysis
  • BMI Business Environment Risk Ratings
  • Legal Issues
  • Legal Framework
  • Labour Force
  • Size
  • Table: Demographic Indicators (2005)
  • Table: Employment Indicators
  • Foreign Investment Policy
  • Overview
  • Table: Asia Annual FDI Inflow
  • Table: Philippines Annual FDI Inflow
  • Foreign Trade Regime
  • Overview
  • Table: Top Export Destinations, US$mn
  • Tax Regime
  • Overview
• Chapter 5: Key Sectors
  • Autos
  • Industry Forecast Scenario
  • Table: Philippines Auto Industry Production & Sales - Historical Data & Forecasts
  • Defence
  • Armed Forces
  • Table: Philippines Defence Sector - Historical Data & Forecasts