Philippines 

Philippines country policy

Policy established 14 September 2004

• ILC, bank guarantee or central public guarantee (unconditional)
• The country ceiling is 1500 mln euro
• Early warning signal 150 mln euro
• - of which was used as at 2011-08-31 10 mln euro

Country class: 4

Philippines country facts

Atradius DSB  Economic Research

Country Report last updated :  30 September 2008 
Country :  PHILIPPINES 

Political Situation
Unstable

Head of state
President Gloria Macapagal-Arroyo (Lakas-CMD), since January 2001. Next elections in May 2010.

Form of government
Government of 6 party coalition, led by Lakas-CMD, a conservative party, similar to the Republican Party in the US.
 
Member of
UN; ASEAN; APEC; IMF; IBRD; ADB; WTO.

Internal Economic Situa tion
Decelerating Growth

General situation
Economy is very dependant on electronics export and remittances, which makes it vulnerable for external shocks. Economic growth is sharply decelerating this year, due to tightening monetary policy and less global demand. Growth is mainly generated by private consumption. High oil and food prices caused very high inflation (10%), possibly triggering social unrest. Banking sector suffers from large amount of NPLs: NPL ratio: 5.7%. Banks are therefore reluctant to lend to private sector which leads to structural underinvestment. Main economic growth sectors are the electronics industry and business process outsourcing. Another major source of income is the remittances from abroad ($14.8 billion, mainly from US). The recession in the US is likely to decrease or decelerate this inflow. Necessary economic reforms include: fiscal measures to boost revenues; privatization of the power sector needs to be accelerated; bank supervision should be improved.

External Economic Situation :   Remittances Income Likely To DECELARATE

Main sources of foreign exchange
Exports of electronics (60% XG), garments (4%); remittances from Filipino workers abroad ($14.8 billion).

Main foreign markets
China (39%), USA (18%), EU [17%, Netherlands (9%)], Singapore (12%), Hong Kong (8%).

Main expenses of foreign exchange
Imports of machines and transport equipment, fuels, chemicals and debt service requirements.
 
Balance of payments 
Current account supported by major inflows of remittances.