Transcript A Presentation by Sec. Ernesto M. Pernia and

What’s Up with the Philippine
Economy?
Ernesto M. Pernia
and
Reynaldo R. Cancio
National Economic and Development Authority
Government-Business Consultation
20-21 June 2016, Davao City
1. PH economy has been on a sharply upward growth trajectory
since the beginning of current decade …
GDP in 2000 prices, trillion Php, 1960-2018
10
Real GDP growth
9
6.2% (2010-2015)
8
Structural break for
potential GDP
ca. 2009
7.6 (2010)
3.7 (2011)
6.7 (2012)
7.1 (2013)
6.2 (2014)
5.9 (2015)
6.9 (2016 Q1)
7
6
5
4
3
2
1
Source: PSA
2
2018
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
1978
1976
1974
1972
1970
1968
1966
1964
1962
1960
0
2. Investment & industry becoming significant drivers of GDP growth, but
agriculture remains lethargic, while service sector continues to dominate …
and net exports are down …
8.0
14.0
Demand Side
6.9%
10.0
Ave. growth
contribution to growth in ppt (%)
8.0
6.2%
6.0
4.0
contribution to growth in ppt (%)
12.0
4.5%
2.8%
2.0
0.0
-2.0
-4.0
6.9%
Supply Side
7.0
6.2%
6.0
5.0
4.5%
4.0
3.0
2.8%
2.0
1.0
0.0
-6.0
-1.0
-8.0
1990-1999
2000-2009
Consumption
Investment
statistical discrepancy
2010-2015
1Q2016
Government
Net exports
1990-1999 2000-2009 2010-2015
Agriculture
Industry
1Q2016
Services
3. Supporting the remarkable economic performance are sound
macroeconomic fundamentals.
Monetary and financial conditions well supportive of growth
Real Interest Rate and Non-performing Loans (NPLs),
2005- 2016
Headline and Core Inflation, Jan 2013- May 2016
5.5
9.0
20.0
8.0
18.0
4.5
16.0
7.0
14.0
6.0
3.5
12.0
5.0
10.0
2.5
4.0
8.0
3.0
6.0
1.5
2.0
-0.5
Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16
Apr-16
May-16
0.5
Core Inflation
Headline Inflation
4.0
1.0
2.0
0.0
0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
NPL Ratio, LHS*
Real interest rates, RHS**
CAR, RHS***
* as of Mar ’16 ** as of Mar ’16 *** as of Q3 2015
Note: RHS – Right-hand scale ; LHS –Left-hand scale
4.Supporting remarkable performance – sound macroeconomic
fundamentals (cont’d).
Robust External Position
Source: Bangko Sentral ng Pilipinas
*Data for China and Vietnam cover years 2012-2014
5. Stronger fiscal position well recognized resulting in investment grade
rating of sovereign debt for the first time in PH history.
Fiscal side:
• Modest fiscal deficit; declining Public debt & interest payments; increasing
reliance on domestic financing
• Result: sound and resilient fiscal position
Fiscal Position
Share of expenditures allocated to interest payments
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0
18.00
13.00
8.00
17.4
13.9
(2.00)
(7.00)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 as of
Mar
2016
Fiscal Position
Revenue Effort
Tax Effort
National Government Borrowing Program (%)
National gov’t outstanding debt (% of GDP)
80.00
70.00
60.00
50.00
40.00
30.00
20.00
10.00
0.00
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Q1 2016
3.00
100.0
80.0
39.4
35.4
34.4
34.8
16.4
6.1
27.9
31.0
72.1
69.0
16.0
45.5
60.0
40.0
64.6
65.6
65.2
83.6
93.9
20.0
84.0
54.5
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 as of
end
Apr
2016
Domestic
Foreign
6
6. Vibrant economy is generating more and better jobs...
5,000
65
62.1
4,310
3,782
Employment Generated
4,000
59.3
3,448
60
56.7
3,000
55
51.9
2,000
50.3
50
1,000
183
-
45
2000-2004 2005-2009 2010-2014
2015c/
Wage and Salary Workers (% in Total Employment)
Employment generated 2000- 2015 (‘000)
Unemployment and Underemployment rates (%)
Apr
'2016c/
Employment Generated ('000)
Wage and Salary Worker (% in Total Employment)
Notes:
a/ The FY 2014 LFS estimate is the average of April, July and Oct rounds excluding Leyte data
b/ The FY 2015 LFS estimates is the average of the Jan to Oct 2015 rounds excluding Leyte data. FY 2015 employment generation estimate is the average of
April, July and Oct excluding Leyte data
c/ Not comparable with previous rounds of LFS; break in the data series due to change sin the Master Sample Design. Starting April 2016, the LFS used the 2013
MS Design, the 2010 Census of Population and Housing(CPH)-based population projections and the 2012 Philippine Standard Occupation Classification
(PSOC).
. *1997-2005: Adoption of population projection benchmark is based on the results of the 1995 Census
**2006-2015: Adoption of population projection benchmark based on the results of the 2000 Census
Source: Philippine Statistics Authority
7. Growth-enhanced fiscal space has allowed major investments in
infrastructure with budget for infrastructure more than tripling...
Public infrastructure spending, Bn PhP and % of GDP
1200
6
5.0
5.4
5.2
1000
5
4.3
800
600
4
2.7
2.7
3
876.6
400
1018.7
2
766.5
595.8
200
346.2
1
306.9
0
0
2013
2014
2015
2016
Actual (2013-2014)/Program(2015)/Proposed(2016)/Projections(2017-2018)
2017
2018
Ratio to GDP (rhs)
Source: Department of Budget and Management
8
8. …and complemented by private investments in public
infrastructure.
Status of PPP Projects (as of 10 May 2016)
No. of Projects
Amount
(PHP bn)
Contract Awarded
12
196.53
Other projects under Implementation
2
106.73
Projects under Procurement
15
579.76
For Approval of Relevant Government Bodies
5
101.94
For Evaluation of Concerned Agencies
1
536.03
Projects with Ongoing Studies
4
48.76
Projects Under Conceptualization/Development
14
NA
53
1,569.75
Projects by Status
Projects Under Implementation
PPP Pipeline
Total
National Economic and Development Authority
Source: PPP Center
9. Increased fiscal resources have also allowed higher public
spending on social services…
3,000
6,000
Spending on Social Services Per Capita (Constant prices)
2,500
5,000
2,000
4,000
1,500
3,000
1,000
2,000
500
1,000
0
0
2000-2004
Education
2005-2009
Health
*GAA 2015
Source: DBM, PSA-NSCB
Social Security (incl. CCT)
2010-2014
Housing
2015*
Total Social Services (rhs)
10. …with the CCT program (4Ps) rapidly scaled up.
Source: DSWD, BESF, DBM, NEDA-SDS
National Economic and Development Authority
11. Human capital: health outcomes are improving...
Selected Health Indicators: various years, 2000-2015
100.0
94.1
92.5
92
90.0
82.9
80.0
85.5
84.8
Proportion of
population
with access to
safe water
(HH in %)4
75
72.8
70
63.9
65
78.7
60
Proportion of
population
with access to
sanitary toilet
(HH in %)4
70.0
60.0
55.1
55
50
51
50.0
40.0
2005-2010
2011-2015a/
National
Health
Insurance
Program
(NHIP)
coverage rate
(in %)5
40
Proportion of
births attended
by health
professional
(%)1
50.7
48.9
44.2
45
2000-2004
61.1
62.2
Contraceptive
prevalence rate
(all
methods)(%)1
37.9
Proportion of
births
delivered in
facility (%)1
35
30
2000-2004
2005-2010
2011-2014
Source: 1/ For 2003, 2008, and 2013 data is from National Demographic and Health Survey (NDHS) and for 2001, 2006 and 2011, data is from the Family
Health Survey (FHS). Please note that NDHS and FHS for the year identified covers period of 5 years prior to survey release | 2/National Nutrition Survey |
3/DOH | 4/APIS | 5/ PhilHealth | 6/Global TB Report WHO
Note: a/ NHIP coverage rate ranges from 2011-2015, while the rest of the indicators range from 2011-2014.
12. Human capital: and education outcomes improving, too.
Primary Education: various years, 2000-2015
100.0
90.60
80.0
60.0
68.41
85.47
73.70
71.67
100.0
77.73
80.0
75.57
40.0
20.0
75.19
71.89
In percent
In percent
69.62
94.90
Secondary Education: various years, 2000-2015
76.54
71.59
60.0
79.19
75.61
64.22
60.01
59.59
8.33
8.78
7.37
2000-2005
2005-2010
2010-2015
40.0
20.0
6.95
6.40
5.40
2000-2005
2005-2010
2010-2015
0.0
0.0
Participation Rate (or Net Enrolment Rate)
Cohort Survival Rate
Completion Rate
Dropout Rate
Source: Department of Education
Note: a/ Latest data for Dropout Rate is 2014.
Participation Rate (or Net Enrolment Rate)
Cohort Survival Rate
Completion Rate
Dropout Rate
13. There appear some inroads, if small, into poverty reduction …
Poverty Statistics, First Semester (%)
Poverty Statistics, Full Year (%)
Source: Family Income and Expenditure Survey (FIES), Philippine Statistics Authority (PSA)
14. … but the absolute numbers of poor are still rising, albeit at a slower
rate…
Magnitude of Poor Population, Full Year (‘000)
Source: Family Income and Expenditure Survey (FIES), Philippine Statistics Authority (PSA)
15. Thus, we continue to compare pretty badly vis-à-vis our
neighbors.
Population Growth and Poverty in ASEAN
• Country
Population growth(%)
2010-2015
•
•
•
•
•
•
•
•
Cambodia
Indonesia
Lao PDR
Malaysia
Myanmar
Philippines
Thailand
Viet Nam
*2010
1.5
1.4
1.5
1.6
....
1.9
0.4
1.1
Poverty(%)
ca. 2014
13.5
11.2
23.2
0.6
25.6*
25.2
10.9
8.4
16. Stark inequality is true not only among the country’s income
classes but also across its regional economies, highlighting NCRcentered development for decades …
Regional shares in national GDP, 2009 & 2014
40
36.3
35.8
35
Share-to-GDP (%)
30
25
20
17.1
17.2
15
10
8.8
9.3
5.7
5
4.1 3.9
3.2 3.1
2.1 1.8
6.5
1.9 1.8
1.9 1.6
3.7 3.7
2.8
2.1 2.0
2.0
3.9 3.9
2.2 2.0
2.8 2.8
1.1 1.3
0.8 0.7
0
NCR
CAR
I
II
III
IVA
IVB
V
2009
Source: PSA
VI
2014
VII
VIII
IX
X
XI
XII
XIII ARMM
17. … while economic growth across regions has been markedly uneven.
Average real GDP growth by region, 2010-2012 & 2013-2014
(2000 prices)
12
10.3
10
9.7
8.1
8
percent
8.0
5.8
6.3
6.7
6.8
6.2
5.9
5.5
6.36.3
5.9
5.3
4.7
4.3
4
4.0
3.9
4.6
4.9
3.4
2.1
1.7
1.1
0
(0.6)
(2)
ave gr 2010-2012
Source: PSA
5.5
4.1
2.3
2
8.0
7.4
6.3
6
8.1
7.5
ave gr 2013-2014
18. Need for behavioral change
• “Vicious patience” vs “virtuous impatience”
• The former results in vicious circle that keeps us in
low-level equilibrium trap, while the latter leads to
virtuous circle that steadily lifts us out of such a trap.
• The three diverse branches of government can argue
and should act according to their respective roles, but
should be complementary.
• And always aim for a common goal: diversity towards
unity – an exemplar that could be followed by all
citizenry – toward achieving poverty- and inequalityreducing economic growth!