Philippines

The Philippines has posted surprisingly low first quarter GDP growth of just 0.4%, far below previous government projections of 2.5%, creating significant cause for concern. However, too much alarm will only serve to amplify the already stinging effects of the US-led global economic turmoil. The country still controls the reigns over its economy primarily due to the fact that its underlying fundamentals, especially within its financial sector, have provided a cushion against external recessionary pressure.

Blessed with stunning landscapes, white sand beaches, rich biodiversity and wonderful hospitality, the Philippines has all the key elements of a premier tourism destination. Yet, for all these natural qualities, the country is still struggling to build the necessary infrastructure to accommodate large numbers of tourists. It seems the government has recognised the underutilisation of its chief assets and is making strides in the expansion of the sector. However, the country is likely to continue serving niche markets until its ongoing infrastructure development is completed.

While the majority of industries are struggling to cope with the effects of the ongoing global economic downturn, the Philippines business process outsourcing (BPO) sector is predicting strong 20-30% growth in 2009. Although this is far short of the near-50% growth the industry sustained throughout 2004-07, it will certainly play a major role in keeping the Filipino economy afloat during what is proving to be a challenging year.

The Philippines has been facing some of the highest energy costs in the region for some time now – a fact any industrialist will attest to. It seems, however, that looming power shortages could possibly be averted as a result of the ongoing economic turmoil; thus giving the government and private sector precious time to boost domestic production. As it stands, the country relies heavily on outside sources of energy, which account for roughly 65% of its energy needs. However, despite slowing industrial demand for power, some industry insiders still believe the country could face a power shortage of 3000 MW by 2012.

Although the Philippines boasts one of Asia's oldest capital markets, it still remains heavily dependent on foreign portfolio investors, a reality confirmed by last year's market activity. The Philippine Stock Exchange Index (PSEi), alongside many of the world's equity markets, lost nearly 50% last year, mostly due to foreign sell off. However, despite the challenges endured by the PSEi in 2008, the Philippines defied most analysts by posting an annual GDP growth of 4.6%.

Industrial production in the Philippines has long been dominated by the manufacturing and export of electronic goods, which have fallen prey to the global downturn as demand slows worldwide.