Philippines

Continued expansion of the economy and the increasing reach of leading shopping chains outside the major cities will help drive growth in the Philippines retail sector in the medium term. However, there is also a possibility that smaller outlets could be swamped by the rising tide of malls and large-scale developments.

Despite concerns over a slowdown in some of its main overseas markets, the Philippines rounded out 2012 with solid growth. Domestic demand has helped drive economic expansion, a trend that is forecast to continue into 2013.

Competition in the Philippines’ telecommunications sector is heating up as the two main players in the market battle for subscribers. While both firms are likely to benefit through an increase in the number of consumers, this may come at a cost if profit margins are deeply impacted, as is expected.

A surge in bank lending to the Philippines’ real estate sector is indicative of the market’s potential in a favourable environment of low interest rates and strong economic growth. The central bank is keeping a watchful eye on the market, and may move to tighten regulations if it feels an asset bubble is forming. However, real demand seems strong enough to maintain momentum despite an increase in speculation.

The signing of a peace agreement between the Philippines government and separatist rebels on the island of Mindanao may result in significant social and economic benefits, including a much-needed boost to the agriculture sector, which has long lagged behind regional rivals.

Growth in the Philippines is expected to continue at a steady clip over the next two years, spurred by proactive government and central bank measures to improve governance and boost macroeconomic performance. There is concern, however, that slowdowns in Europe, the US and China could dampen full-year growth figures.