MANILA, Philippines - The ranking of the Philippines among the world’s leading financial systems improved six notches to 44th this year from 50th last year due to the country’s financial reforms, a survey conducted by the World Economic Forum (WEF) showed.
The 427-page Financial Development Report showed that the score of the Philippines increased by 0.17 to 3.13 this year from 2.96 last year to improve its ranking to 44th in the Financial Development Index 2011.
“The Philippines improves significantly over the past year, moving up an impressive six spots in the index,” the report stated.
The WEF ranked 60 countries to compare themselves with their peers and track their progress over time. In recognition of the diversity of economies covered by the index and the variety of financial activities that are vital to economic growth, the report provides a holistic view of financial systems.
The ranking was based on several factors including institutional environment, business environment, financial stability, banking financial services, non-banking financial services, financial markets and financial access.
The WEF pointed out that financial intermediation remains an area of strength for the Philippines as its non-banking financial services improved to 20th and financial markets continued to develop resulting to a higher rank of 33rd.
Specifically, the report added that the Philippines has a relative advantage in areas such as securitization with a ranking of fifth, M&A (merger ad acquisition) activity with a rank of 25th, and derivatives markets with 25th.
However, the WEF said its business environment ranked 55th and financial access ranked 50th and continued to hinder its development.
Furthermore, the report also cited the lack of infrastructure and high cost of doing business as other major concerns.
“A weak business environment is the result of a lack of infrastructure (53rd) and an extremely high cost of doing business (60th).
The report showed there are also other impediments including limitations in financial access in areas such as foreign direct investment wherein the country ranked 48th and the total number of automated teller machines (ATMs) wherein it ranked 45th.
Hong Kong dislodged the US from the top spot with a score of 5.16 from its previous score of 5.04 wherein it placed fourth. On the other hand, US dropped to second spot with a score of 5.15 while United Kingdom also dropped to third place from second place with a score of 5.0 and Singapore fell to fourth place from third place with a score of 4.97.
Others in the top 10 include Australia, Canada, Netherlands, Japan, Switzerland and Norway.
The report, entitled “Striving to Finance Economic Growth,” stated that the global economic environment continues to face significant uncertainty and the urgency of the situation is underscored by recent developments in the eurozone.
“While many believe that the problems brought on by the subprime crisis have not yet been fully addressed, governments are forced to grapple with new issues on a near daily basis. In particular, the speed at which developments occur has been surprising,” the report stated.
It added that countries are facing enormous challenges and their policy responses should address not only the immediate symptoms of the crises, but also their underlying causes
“These responses need to be effective and instill more resilience into the system, but at the same time it is important to avoid unintentionally inhibiting economic growth. Financial systems play a vital role in economic development and, to be successful in the longer term, countries must take a holistic view by identifying and improving long-term factors that are crucial to their development,” the WEF said.
Latest data from the National Statistical Coordination Board (NSCB) showed that the GDP growth of the Philippines slackened to 3.2 percent in the third quarter from 7.3 percent in the same quarter last year due to weak global trade and underspending by the Aquino government, bringing the GDP expansion to 3.6 percent from January to September this year.