The Philippines: Hungry for More

 FOOD and beverage exports to the Philippines soared by 16% in 2010, making it one of the largest and fastest growing markets in the world for this high value, job-generating sector. Whilst official Philippine F&B import statistics for 2010 had not been posted as of March 2011, post estimates this figure at $2.2billion, an increase of 37% over 2009.
Most products that comprise the sector enjoyed strong growth, with exceptional sales increases in fresh vegetables, dairy products, tree nuts, breakfast cereals, and processed fruits and vegetables (see charts). The fastest GDP growth in 24 years, a strengthening peso, and an increasing demand for "gourmet", "healthy" and "convenience" products lead analysts* to predict that the Philippines will remain a strong market for food and beverage exporters.

U.S. outpaces New Zealand
The U.S. is expected to surpass New Zealand as the top exporter to the Philippines with sales estimated at $370 million in 2010. This remarkable growth extends a steady trend of impressive export achievement that has carried through most of the decade. As of the end of 2010, the Philippines was the largest U.S. export market in Southeast Asia and the 13th largest export market in the world for U.S. F&B products. In 2009, the U.S. and New Zealand each held a 15% share of the market. Roughly 70% of New Zealand's F&B exports are comprised of milk powder. The other top exporters and their respective market shares in 2009 are: Thailand (9%), Australia (7%) and China (7%).

Macroeconomic situation
After slow growth of one per cent in 2009, GDP expanded by 7.3% in 2010, the highest since 1986 and the fastest growth in 24 years. Economic growth in the Philippines averaged 4.5% per year since 2001 until the onset of the global economic crisis in late 2008. The remarkable upward trend is driven by a bullish peso and an economy that expanded by 7.3% in 2010. The key factors that contributed to this growth are:
? Rapid growth in the industrial and services sectors, particularly the outsourcing of business processes (e.g. call centres and medical/ legal transcription services)
? Rebounding export sector due to the upturn in global economy
? Increased consumer spending
? Increased money sent home by Filipinos working overseas
? General sense of optimism in the business sector
According to the National Statistical Coordination Board (NSCB), the industrial sector grew by 12.1%, whilst the services sector grew by 7.1%. At the same time, the agricultural sector declined by 0.5 per cent. A large contributor to the growth in the services sector is the bullish business process outsourcing industry (BPO) that grew by 25% in 2010 generating $9 billion, equivalent to 5% of GDP. According to the Commission on Information and Communications Technology under the Office of the Philippine President, the BPO industry is expected to generate $11 billion in 2011 and in the process create an additional 84,000 jobs, bringing the total number of BPO workers to 610,000 by the end of the year.
Whilst full year figures are not yet available, aggregate merchandise exports from January to November 2010 amounted to $47.22 billion, an increase of 34.5% over the previous year, surpassing the Philippine government target of $46 billion.
The Philippine economy has the largest service sector in Southeast Asia and private consumption comprises 75% of the economy. Filipinos currently working overseas sent back a record $18.76 billion in "remittances" from their wages to their families in 2010. This accounted for a tenth of GDP and is eight per cent over the previous year's total.
The Central Bank of the Philippines projects anNike Converse Shoes