Philippines economy

By Hugo Brennan, Verisk Maplecroft

When the Association of Southeast Asian Nations (ASEAN) launches its economic integration project in December this year, it could provide the region with the impetus to become a key emerging market powerhouse. However, the 10 country grouping needs to overcome several significant hurdles if the proposed ASEAN Economic Community (AEC) is to succeed in freeing up trade and commerce between member states.

Chief among these is ASEAN’s institutional weakness, which is hampering efforts to bring together diverging national interests and counteract economic protectionist sentiment in key members, such as Indonesia. Many countries in the bloc also face difficult political realities on the domestic front which have the potential to divert attention away from the goal of integration. The success of the AEC will hinge on these factors, but whether it prospers or flounders, foreign businesses in the region will face a changing investment landscape that they need to be prepared for. Read more

By Gavin Bowring and Felipe Salvosa

The City of Dreams Manila, an integrated gaming and entertainment resort that cost $1bn to build, threw open its doors this week in an attempt to lure a slice of the revenues of Asia’s gambling market away from Macau and Singapore.

The resort, which was developed by Melco Crown Entertainment in conjunction with Belle Corp, a subsidiary of major conglomerate SM Group, is banking on its 380 gaming tables, 1,700 slot machines, and 1,700 electronic table games to bring in the high rollers and boost its owners’ stock prices. Read more

Chronic congestion at the Philippines’ biggest port is forcing Maersk Line, the world’s biggest container shipper, to treble the frequency of container services that it diverts to an alternative port 130km away to keep goods flowing in and out of the country.

The snarl up highlights the infrastructure bottlenecks that are threatening the Southeast Asian country’s ability to maintain the rapid growth of recent years.

While creaking infrastructure has long been a problem in the Philippines, it is being exposed as a serious constraint amid a flood of foreign investment in the country, which has helped turn it into a star performer in Asia. Read more

While the world’s media has focused its attention on Tacloban, the biggest city affected by Typhoon Haiyan, other places on the island of Samar have been badly hit. Basey is one such town. Just across the bay from Tacloban, it has received very little in the way of aid or assistance from the government in spite of extensive damage. Tom Griggs reports.

It’s hard to imagine the scale of destruction following the typhoon that hit the Philippines on Friday, killing an estimated 10,000 people and leaving a trail of devastation.

However, despite Haiyan being one of the strongest typhoons ever recorded, the impact on the Philippines economy may be relatively slight, and the reconstruction effort may even boost GDP. While that is hardly a comfort to people without homes or in mourning, an economic slump would be a double whammy better avoided. Read more

There was plenty of thinly-veiled gloom in the World Bank’s semi-annual update on the economies of East Asia. It expects the region to growth at 7.1 per cent this year, down from its projection of 7.8 per cent six months ago. Most of that is down to falling growth in China, though all the countries covered are experiencing problems of some sort.

All except one, that is: the Philippines. Read more

Moody’s Investors Service on Thursday lifted the Philippines’ credit score one notch from Ba1 to Baa3, becoming the third international credit rating agency to give the southeast Asian country an investment-grade rating. It said the Philippines’ ratings outlook is positive, making another upgrade possible in the next year and a half. Read more

In another sign that the benefits of faster economic growth in the Philippines have yet to trickle down, the country’s jobless rate in April rose to 7.5 per cent, the highest in almost four years, the government statistics office said Tuesday.

That is roughly in the same quarter that GDP surged 7.8 per cent, the highest in more than two years. Asia’s fastest growing economy also has one of the region’s biggest unemployment problems. Read more

The Philippine economy grew 7.8 per cent in the first quarter from a revised 6.8 per cent the previous quarter, beating analysts’ expectations of an increase of just 6 per cent, as sharply higher investments and government spending offset the impact of faltering demand from China, America and Europe that slowed economies elsewhere in the region. Read more

The Philippines has some news to cheer: Standard & Poor’s, the rating agency, has bumped up its credit rating one notch to ‘BBB-’.

Which means it has become the second agency after Fitch to put the country’s long term foreign debt at investment grade. One is good news; how significant is two? Read more

Fitch Ratings on Wednesday gave the Philippines its first investment grade in a move that highlights the economic progress made under president Aquino and paves the way for boosting foreign investment.

The news will be music to the ears of reformist finance minister Cesar Purisima (pictured) who told FT journalists this week: “Good governance is good economics. I think we have shown that.”

Manila will now hope either Standard & Poor’s or Moody’s also lifts the country to investment grade as two such ratings are needed for many fund managers to invest in a country’s bonds. It may not be a long wait. Read more

Electronics companies need strong nerves in the face of the industry’s inherent volatility. Analysts had expected the Philippines to see a solid gain of around 6 per cent in exports in January. In the event, Manila on Tuesday posted a 2.7 per cent decline – thanks largely to a 32 per cent plunge in electronics shipments.

The next few months should be better, given the signs of recovery in the US. But the unpredictability of the markets make life tough for the electronics groups and their suppliers. Read more

The First Philippine Industrial Park, some 50km south of Manila, is already a whopper, accounting for about 3 per cent of the country’s total exports. Which is why it is notable that Sumitomo Corporation, the Japanese trading house that owns 30 per cent of it, wants to make it even bigger. Read more

The Philippine economy grew 6.6 per cent in 2012, accelerating from just 3.9 per cent growth the previous year. That’s good news for investors whose confidence in the southeast Asian nation is already remarkably strong. Just in the past four weeks, the stock market (see chart left) has breached closing records a dozen times. Read more

When Saudi Arabian investors suddenly needed to sell an 80 per cent stake the unfinished Fairmont Hotel and Raffles Suites and Residences project in the Philippines’ Makati financial district late last year, their local partner lost no time stepping up to the plate.

It probably helped that the Saudis’ local partner was the Ayala Corp, the Philippines’ oldest business house. In short order, the Filipino group bought out the Saudis for $24m and went on to complete the project’s 280 rooms, 32 suites and 237 serviced residential units in time for the peak Christmas season. The hotel opened its doors at exactly 3:33 pm on December 3. Read more

The Philippine economy unexpectedly surged in the quarter ending in September, growing by 7.1 year-on-year from a revised 6 per cent in the previous three-month period, as well-timed monetary easing and accelerated government spending helped counter the effects of the global and regional slowdown.

In the first nine months of the year, the Philippines grew 6.5 per cent compared to 3.9 per cent in the same period last year, according to the government National Statistical Coordination BoardRead more

Credit rating agency Moody’s on Monday raised the Philippines’ debt rating to just a notch below investment grade, boosting expectations that the country, one of the world’s few investment bright spots, may finally win an investment grade rating next year.

The Moody’s upgrade aligns its rating with those of Standard & Poor’s and Fitch. Read more

The Philippines cut its main policy rates by 25 basis points Thursday for the fourth time this year, bringing the central bank’s overnight borrowing rate to 3.5 per cent and overnight lending rate to 5.5 per cent.

The bank has cut rates by 100 basis points this year as it seeks to cushion the Philippine economy from the potentially adverse impact of sluggish growth in rich countries. The International Monetary Fund recently scaled down its growth forecast for global output from 3.5 to 3.3 per cent in 2012. Read more

By Roberto Herrera-Lim of Eurasia Group

Foreign investors are again kicking the tyres of the Philippine economy, and with good reason. During the first half of the year, the economy, one of Asia’s consistent underperformers, expanded by 6.1 per cent from a year earlier. Only China and Indonesia grew faster in Asia. Resilient remittances from the country’s army of workers located across the world from the Middle East to North America have fueled domestic consumption.

This leads to the most important question foreign investors face when now looking at the Philippines: Are things really that different, or is this simply a matter of good fortune? Read more