ph economy challenges emerging priorities

8/6/2019 PH Economy Challenges Emerging Priorities

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I. The Philippine Economy and Challenges

II. The Growth Framework

2



I. The Philippine Economy and

3



Average GDP growth in the Philippines has been

8.0

12.0

-4.0

0.0

.

Structure of Demand 2005Structure of Demand 2005--2010 S12010 S1

(Ratio to GDP, in %)(Ratio to GDP, in %)

Gross Domestic Investment 2005Gross Domestic Investment 2005--2010 S12010 S1

(Ratio to GDP, in %)(Ratio to GDP, in %)

Sources: National Statistical Coordination Board

Indonesia Malaysia Philippines Thailand Vietnam

26.6 26.526.0

27.825.7

24.0

27.0

.

Philippines

6.4 6.7 6.6 6.4 7.1

6.9

17.6 17.6 18.4 18.2 17

16.8

3.51 2.09

0.59

50

80

14.6 14.515.4

15.314.6

17.2

15.0

18.0

.

Asian economies, ave.78.2 78.3 77.4 78.2 80.5 67.1

-6.45 -1.12 -3.3

-10

20

4

.

2005 2006 2007 2008 2009 2010 S1

Source: NSCB, Asian Development Outlook 2010Note: selected Asian economies/countries include Taiwan, Thailand, HK, China, Korea,

Malaysia Singapore, Indonesia

net exports investment government private

Source: National Statistical Coordination Board Note: may not add up to 100% due to statistical discrepancy



Risks to economic growthRisks to economic growth

Consumer prices

Domestic prices to increase slowly

Higher demand for food and oil as economic

act v ty re oun s aster

Volatility in exchange ratesUnsure path of domestic prices

Cost of imported raw materials and

commodities

Effects of weather disturbances

6

Narrowing source of investment



Increased competitiveness should be at the core of theIncreased competitiveness should be at the core of thedevelopment process...development process...

CountryGCI

2009-GCI

2010 -

Singapore 3 3

Hong Kong 11 11

Taiwan, China 12 13

Korea, Rep. 19 13

Malaysia 24 26

China 29 27

Thailand 36 38

Indonesia 54 44

Vietnam 75 59

Philippines 87 85

7*Source: The Global Competitiveness Report 2010-2011, World Economic Forum

Cambodia 110 109



Growth dynamics reflect imbalance between sectoral output and

17.4%

Sectoral Output Shares, 2005-2010 Employment Share by Sector, 2005-2010

employment...

33.3%

49.3%

34.2%

15.1%

50.7%

Agri Industry Services Agri Industry Services

Source: National Statistics Office – Labor Force Survey

11.9

7.9 8.010

12

14Comparative Unemployment Rates in Asia (in %), 2004 - 2009

Results of the PHILIPPINES LABOR FORCESURVEY

Jan – Jul

2009

Jan - Jul2010

.

7.4 7.5

0

2

4

6Employment level (‘000) 34,922 35,896

Employment Generated 982 974

Employment Growth (%) 2.9 2.8

8

2004 2005 2006 2007 2008 2009

China Indo Mal Philippines Sing Thailand Vietnam

Source: Asian Development Outlook 2009; NSO-Labor Force Survey

Note: Starting April 2005, the LFS adopted the new unemployment definition

Unemployment rate (%) 7.6 7.4

Underemployment rate (%) 19.0 18.5

Source: National Statistics Office – Labor Force Survey



The slow pace of rural development remains a challenge for

the agriculture sector...

Low Productivity and Weak Competitiveness

-

- Limited access to productive resources and quality support services

Ph sical Constraints

- Relatively scarce land resources compared to ASEAN neighbors.

- Luzon and Visayas periodically suffer from weather disturbances causing

crop damages.

- The archipelagic nature of the country makes it costly to transport goods

compared to other countries with contiguous areas.

Population Growth Rate, 1800-2007 (in %)

2

3

4

5

9

0

1800 1812 1819 1829 1840 1850 1858 1870 1877 1887 1896 1903 1918 1939 1948 1960 1970 1975 1980 1990 1995 2000 2007



Poverty and InequalityPoverty and Inequality

33.032.9 33

34

26

27

28 %

M i l l i o n s

Poverty Incidence of the Total Population

25.5 23.8 27.6

30.0

29

3031

22

2324

25

2000 2003 2006

Magnitude of Poor Poverty Incidence

0.4800

0.4900

GINI Concentration Ratios, PhilippinesGINI Concentration Ratios, Philippines

0.4

0.5

0.6

GINI Concentration Ratios, RegionalGINI Concentration Ratios, Regional

0.4822

0.4605 0.45800.4500

0.4600

0.4700

0.0

0.1

0.20.3

10Sources: Nat ional St at ist ical Coordinat ion Board, Nati onal St at ist ics Of f ice

0.4400

2000 2003 2006

-0.1

2000 2003 2006



Addressing poverty and inequality requires ensuringAddressing poverty and inequality requires ensuring

inclusive access to human capital...inclusive access to human capital...

2530 Revenue E ort Percent o GDP

10

15

20

15

20

25

0

5

Phi ls. Indonesia Malaysia Singapore Thailand China HongKong Vietnam2007 2008 2009

0

5

Phils. Indonesia Malaysia Singapore Thailand China HongKong Vietnam

2007 2008 2009

3.53.2 3.23.5

4.0

Education Budget 2000-2009(Ratio to GDP, in %)

0.40.5

0.6

Health Budget 2000-2009(Ratio to GDP, in %)

.

2.6 2.4 2.4 2.5 2.5 2.7

1.0

1.5

2.0

2.53.0 0.4 0.4

0.3 0.3 0.30.3 0.3

0.3

0.3

0.2

0.3

0.4

11Sources:Sources: Budget of Expenditures and Sources of FinancingBudget of Expenditures and Sources of Financing -- DBMDBM

0.0

0.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

0.0

0.1

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009



Climate change also poses a major risk toClimate change also poses a major risk to

grow an pover y a ev a on...grow an pover y a ev a on...Observed Mean Annual Mean Temperature Anomalies in the Philippines Period: 1951-2006

(departures from the 1971-2000 normal values)

An increase of 0.62°C from 1951-2006 (56 years)

12Source: Climate Baseline and Change Scenario for the Philippines, CAD/PAGASA/DOST



“SOCIAL CONTRACT WITH THE FILIPINO

PEOPLE”

A country that has achieved inclusive growth ands c arac er ze y rap , sus a ne , an roa -based economic growth; focused on creating

employment; and significantly reduced poverty

1414



1. Attain a sustained and high economic growth thatprovides productive employment opportunities;

2010 2011‐2016

Real GDP growth rate 5‐6% 7‐8%

Real GNP growth rate 7‐8% 9‐10%

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A stable macroeconomic environmentA stable macroeconomic environment

Fiscal Monetary, Financial, and

External

• Commitment to low and

stable inflation conducive

sustainable growth

• Reduce external

vulnerabilities

• Strengthen financial

capitalization, supervision

16Source: Department o f Finance

and market discipline

Source: Bangko Sentral ng Pilipinas



Sector ParticipationSector Participation

• Sound and consistent public policies

• Effective ood overnance measures

• Enforcement of the rule of law

• Efficient investment programming processes

Reforms

18



• Focus on infrastructure support facilities for

tour sm, agr cu ture, soc a serv ces, an growt

centers

•

• Ensure competition, fairness and transparency

• Provide assistance in preparation of business case,pre-FS, full FS, detailed engineering, tender

document, etc

-• Protect public interest

•

19



3. Implement social safety nets

• Protect and enable those who do not have the

process

20



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ph economy challenges emerging priorities

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