The country’s financial development ranking climbed six notches this year compared to last year but remained in the bottom rung of the region, according to Geneva-based World Economic Forum (WEF).
In its Financial Development Report 2011, WEF said the Philippine ranking improves “significantly” over the past year, moving up an “impressive” six spots in the index to 44th, among 60 countries.
Last year, the country ranked 50th.
The report said financial intermediation remains an area of strength for the Philippines as its non-banking financial services and financial markets continue to develop, ranking 20th and 33rd, respectively.
Specifically, the country has a relative advantage in areas such as securitization, ranking 5th; M&A activity, 25th; and derivatives markets, 25th.
The Philippine ranking in business environment at 55th and financial access, 50th, however, continue to hinder its development.
A weak business environment is the result of a lack of infrastructure, ranking 53rd and an extremely high cost of doing business, 60th.
Other impediments include limitations in financial access in areas such as foreign direct investment at 48th place and the total number of ATMs, 45th.
Hong Kong tops the Financial Development Index, overtaking United States and the United Kingdom.
The WEF said while the challenge for advanced economies will lie in making new credit more available to encourage and support economic activity, emerging economies still need to make further improvements across all of the main variables.
“The need to make different forms of capital available will be essential for future growth and recovery,” Isabella Reuttner, Senior Project Manager at the World Economic Forum and editor of the report, said.
“The challenge will be how to encourage economic activity while not fueling the next credit bubble, which could cause severe consequences down the line. Therefore, when looking for possible solutions, decision-makers should not lose sight of the long-term consequences while they fix the short-term situation,” she added.
The Financial Development Report focuses on a set of long-term measures to support the overall development of financial systems.
The report analyzes the drivers of financial system development in advanced and emerging economies to serve as a tool for countries to benchmark themselves and establish priorities for reform.
The rankings are based on over 120 variables spanning institutional and business environments, financial stability, and size and depth of capital markets, among other factors. –Daily Tribune
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