Country Risk Rating

A4
A somewhat shaky political and economic outlook and a relatively volatile business environment can affect corporate payment behavior. Corporate default probability is still acceptable on average. - Source: Coface
A1A2A3A4BCDEVery Low RiskAcceptable RiskVery High Risk

Business Climate Rating

B
The business environment is mediocre. The availability and the reliability of corporate financial information vary widely. Debt collection can sometimes be difficult. The institutional framework has a few troublesome weaknesses. Intercompany transactions run appreciable risks in the unstable, largely inefficient environments rated B.
A1A2A3A4BCDEVery Low RiskAcceptable RiskVery High Risk

Strengths

  • Large and young population (50% is under 25), qualified and fluent in English
  • Multilateral (RCEP, ASEAN) and bilateral free trade agreements. Free trade agreement under negotiation with the EU
  • Diverse geographic and sectoral origins of expatriate workers’ remittances (8% of GDP in 2022)
  • Thriving business process outsourcing (BPO) sector
  • Poverty reduction (Pantawid Pamilyang Pilipino Program)
  • Robust tourism sector with numerous assets

Weaknesses

  • Inadequate infrastructure levels, low fiscal revenues (around 16% of GDP)
  • Governance shortcomings and high corruption perception according to the corruption perceptions index (ranked 116th out of 180 countries in 2022)
  • Weak diversification of manufacturing production, dependence on imports of energy and capital goods resulting in very large trade deficit
  • Limited added value from exports
  • High levels of income inequality, underemployment leading to expatriation
  • Increased tensions with China in South China sea
  • Strict bank secrecy and casinos that facilitate money laundering
  • Exposed to natural disasters (typhoons)
  • Terrorism in the south of the country
  • Quarrels between political clans and the large families that personalise them

Current Trends

Source:

Coface (04/2024)
Philippines