Why the Philippine structural story is one of the most interesting in ASEAN

There are three factors for this observation.

Morgan Stanley's forecast for the Philippines is predicated on the country being less vulnerable to QE taper and rising global real rates than other ASEAN economies, should global real rates start to rise.

According to a research report from Morgan Stanely, meanwhile, a pickup in global economic growth would support goods/services exports and remittances, whilst a quickening in government disbursement from the recent moderation would also lend fiscal support.

Further, more fundamentally, it thinks the Philippines, alongside Indonesia and India, has one of the more attractive structural stories in ASEAN and AXJ.

It noted that a confluence of three factors underpin Philippines’ structural story.

Here's more from Morgan Stanley:

First, political reforms and political stability have limited the risk of the country returning to an authoritarian regime where policymaking decisions may not be optimized given vested interests and the absence of institutional checks and balances.

Second, macroeconomic stability is an important precursor for sustained growth. The improvement in macro balance sheet and, hence, macroeconomic stability in the

Philippines has been a significant departure from the periodic BOP shocks seen in the 1980s and 1990s.

This reduces the macro risk premium associated with the economy, as seen in the structural decline in capital cost, which in turn beget better growth momentum.

Third, economic liberalization measures, together with benign demographics and a competitive workforce, have enabled the Philippines to cater to global demand via offshoring trends and overseas foreign workers.

The services trade surplus and remittances not only enhance growth but also further reinforce macroeconomic stability.

What Are the Risks and Where Could We Be wrong? Risks to growth stem from global factors such as the pace of global recovery and local factors such as policymakers’ ability to push through reforms as well as the pace of implementing spending.