RP market falls eight notches in global survey

THE PHILIPPINES became the “biggest faller” among 27 emerging markets in a survey that ranked countries based on its growth opportunities.

Based on the International Business Report (IBR) 2010 of US-based accounting firm Grant Thornton, the Philippines slipped to 25th place this year from 17th place two years ago in the ranking of countries based on the “opportunity index.”

The country’s total score in the opportunity index, calculated based on key indicators that include gross domestic product (GDP), GDP per capita, population size, international trade growth projections and the human development index (HDI), dropped to 56 points from 69 points in 2008.

The country’s score is way below that of China, which took the top spot with 454 points.

Raul Nicolas S. Tomas, director for Punongbayan & Araullo specialist advisory services said that “the Philippines faltered because of the relatively slow economic growth that was projected for the country.”

Grant Thornton projected the country’s GDP to grow by 4% on the average for 2010-2016 against China’s 8%. Punongbayan & Araullo is the local partner of Grant Thornton.

“The economy weathered the storm better than most of its neighbors over the course of 2008 to 2009 due to lower dependence on exports, but continued reliance on remittances from an estimated five million Filipino workers overseas to fuel consumer demand is a significant risk to long-term economic growth,” the report said.

University of the Philippines economist Benjamin E. Diokno said the growth projection among other indicators could have weighed down the country’s ranking. “We should be comparable with Indonesia which is ranked ninth. The only difference is that they have good governance because even their population is bigger than ours which is about 150-220 million,” he said.

University of Asia and the Pacific (UA&P) economist Victor A. Abola concurred adding that the US-based firm could have “underestimated” the growth potential of the country. “The growth prospects are getting better, exports recovering, very robust construction spending both in the private and public sectors and rosy mining industry,’ he said.

Despite the tumble in the opportunity index however, Filipino business leaders who were surveyed feel optimistic about the country’s economic prospects, making the Philippines the sixth most optimistic country this year — for which economists attribute to the election euphoria.

This year’s report showed that the optimism/pessimism balance of Filipino business leaders surveyed was at +68 as they are particularly optimistic regarding profitability in the next 12 months. “Filipino business leaders are optimistic because of the election. They have confidence that the new set of leaders will reverse the flow of investments so its more of better expectation for the new administration,” Mr. Diokno said.

The report also noted that the country’s labor market also appears to be “fairly healthy.” “A balance of +29% of businesses expanded their work force in 2009, while this year a balance of +40% are expecting to increase employment, and 70% will increase salaries at least in line with inflation,” Grant Thornton said. — Gloria Krisana L. Gallezo, Businessworld