GETTING THE FUNDAMENTALS RIGHT ERNESTO ERNES TO M. M. PE PERNIA, - PowerPoint PPT Presentation

GETTING THE FUNDAMENTALS RIGHT ERNESTO ERNES TO M. M. PE PERNIA, NIA, PhD PhD Sec Secretar retary y of So of Socioe cioecon conomic P omic Plann lanning ing National National Economic and Development Authority Economic and Development Authority

KEY MESSAGES 1. PH economic growth has been on a sharp monotonic uptrend for 3.5 decades , making the economy among the fastest-rising in the world. PH economy has undergone structural transformation – increasingly 2. driven by investment in lieu of consumption, and industry instead of service sector; both are typically highly job-generating. 3. Total factor productivity (capital & labor coupled with technology) increasing remarkably , surpassing those of other traditionally dynamic ASEAN economies.

KEY MESSAGES 4. While the macroeconomy appears robust, inequality across regions , besides across households, remains highly skewed, and chronic poverty persists . 5. Thus, the thrust of PDP 2017-2022 , as spelled out in National Spatial Strategy , is regional & rural development , and decongesting the mega urban-industrial region centered around Metro Manila. 6. Most of the infrastructure projects under government's "Build Build Build" program are intended to benefit lagging regions , either intra-regionally or via inter-regional connectivity. 7. Infrastructure program will create mass employment, vitalize the regions, and markedly reduce inequality and poverty .

PH is one of the fastest-moving economies in Asia Philippine economic growth rate, 1980-2017 (Q1) 6.3 % 4.5 2010-2016 8 % 2000-2009 2.8 6 % 2.0 % 1990-1999 4 1980-1989 2 0 -2 -4 -6 -8 201 6 198 0 198 1 198 2 198 3 198 4 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 201 5 Source: Philippine Statistics Authority (PSA) Photo source: Vuringroup.com

GDP growth breakdown, 2016 and 2017 (Q1) 2016 2017 PARTICULARS 2016 1 st Qtr 2 nd Qtr 3 rd Qtr 4 th Qtr 1 st Qtr GROSS DOMESTIC PRODUCT 6.9 7.1 7.1 6.6 6.9 6.4 GROSS NATIONAL INCOME 7.3 7.0 6.6 6.0 6.7 5.9 7.5 % 6.8 % 5.7 % 11.8 % Agri, Fishery and Forestry (4.3) (2.0) 3.0 (1.3) (1.3) 4.9 Industry 9.3 7.6 8.8 7.9 8.4 6.1 o.w. Manufacturing 8.0 6.2 6.8 7.0 7.0 7.5 Services 7.5 8.2 6.8 7.2 7.4 6.8 Household Final Consumption 7.1 7.5 7.2 6.2 7.0 5.7 Exp. MANUFACTURING SERVICES Household Final FIXED CAPITAL Gov’t Final Consumption Exp. 11.8 13.5 3.1 4.5 8.4 0.2 FORMATION Consumption Exp Capital Formation 23.7 7.9 31.5 30.3 21.7 14.7 o.w. Fixed Capital Formation 28.3 30.3 25.4 18.5 25.2 11.8 Exports 10.7 20.3 10.2 10.6 9.0 13.4 Imports 18.5 17.5 21.1 25.4 13.3 15.4 Photo source: Vuringroup.com

Total factor productivity (capital & labor coupled with technology) increasing remarkably, surpassing other traditionally dynamic ASEAN economies Photo source: birt.actuate.com

Economic growth targets for 2017-2022 Real GDP Growth Rate (%) Actual Projections 1/ 2/ 7.0-8.0 6.5-7.5 6.9 6.1 6.1 2017 2018 2019 2020 2021 2022 2014 2015 2016 1/ PSA’s actual figures revised as of April 2017 2/ Adopted by the Development Budget Coordination Committee (DBCC) as of December 2016 Photo source: Vuringroup.com

Inflation to remain within the government’s target of 2% - 4% Photo source: Greenpeace USA

RISKS ISKS AND ND UN UNCERTAIN INTIES IES We remain vigilant and well- positioned against the downside risks to growth. • Fragile recovery in developed economies • Possibility of uneven global growth prospects • Protectionist and nationalist sentiments in the West • Greater volatility of capital flows and exchange rate • Oil price volatility • Geopolitical tensions in various regions External • Weather disturbances • Inflationary pressures from oil price volatility and high food prices • Logistical bottlenecks in implementation of infrastructure projects Domestic Photo source: Rappler

ASEAN TRADE AND INVESTMENTS EU U.S. ASEAN • 10 % • 9 % • 24 % TRADE • 17 % • 11 % • 18 % FDIs Photo source: www.globaltrademag.com

EXPECTED EXPECTED DRIVERS OF GR DRIVERS OF GROWTH WTH Demand side • Household consumption : remittance inflows, better employment prospects • Government spending on physical Supply side infrastructure and human capital • Resurgence of agriculture and investment fishery • Private investment in industry and • Manufacturing resurgence manufacturing • Continuing growth of the IT-BPM • Exports of services : IT-Business sector Process Management (BPM) and tourism • Influx of tourists Photo source: johninthephils.blogspot.com

THE PHILIPPINES’ GOLDEN AGE OF INFRASTR INFRASTRUCTURE UCTURE Government will ramp up infrastructure spending to PhP 8.4 trillion until 2022 – from 5.3% of GDP in 2017 up to 7.4% of GDP in 2022 Photo source: infrastructurene.ws

Three-Year Rolling Infrastructure Program (TRIP) TRIP for 2018-2020 (PhP Bn) PhP4 trillion indicative total investment requirement Sectoral Breakdown 2018 2019 2020 Total % from 2018 to 2020 Transportation 627.37 764.56 937.84 2,329.77 58.03% Water Resources 79.21 72.55 87.26 239.02 5.95% Social Infrastructure* 390.90 339.88 312.70 1,043.48 25.99% Energy 15.08 12.36 12.67 40.11 1.00% ICT 53.17 41.54 18.14 112.85 2.81% Others 17.72 14.95 19.99 52.66 1.31% Administrative Building 85.92 72.28 38.79 196.99 4.91% Total 1,269.37 1,318.12 1,427.39 4,014.88 100.00% * DepEd’s proposed budget for infrastructure outlay was based on FY 2017 GAA Photo source: blue-works.com

Thank you and mabuhay! www.neda.gov.ph pdp.neda.gov.ph build.gov.ph

2017 ECONOMIC PERFORMANCE NE T PRIMA RY INCOME (NPI) GROSS N A TIONA L INCOME (GNI) GROSS DOMESTIC PRODUC T (GDP) Q4 2016 Q1 2016 Q1 2017 9 . 4 % 7 . 3 % 6 . 9 % 6 . 6 % 6 . 4 % 3 . 3 % 5 . 9 6 . 0 % % 3 . 9 % Photo source: Vuringroup.com

For the first quarter, the Philippines overtook both Vietnam’ s and Indonesia ’s 5.1 -percent growth, and Thailand’s 3.3 -percent. The country ranked second to China’s 6.9 -percent while India has not released its data. 6.4 % 6.9 % 5.1 % 5.1 % 3.3 % CHINA PHILIPPINES VIETNAM INDONESIA THAILAND 16 Photo source: Vuringroup.com

YEAR-ON-YEAR GROWTH R A TES Q1 201 6 Q1 201 7 Q1 201 6 Q1 201 7 By Expenditure shares By Industrial Origin 31 . 5 % 21 . 1 20. 3 % % 17. 5 % 1 1. 8 % 10 . 2 % 9 . 3 % 7 . 5 % 7. 9 7 . 1 % % 6. 1 6. 8 % % 5. 7 % 4. 9 % 0. 2 % - 4 . 3 % Agriculture, Household Final Gov’t Final Capital Formation Exports Imports Industry Services Consumption Consumption Fishery and Expenditure Expenditure Forestry 17 Photo source: Vuringroup.com

Gross Domestic Product (GDP) Growth (%) 9.0 8.4 8.0 7.6 6.9 7.0 6.4 6.2 6.0 5.6 5.1 5.0 4.6 4.0 3.0 2.0 1.0 0.0 Q1 2010 Q1 2011 Q1 2012 Q1 2013 Q1 2014 Q1 2015 Q1 2016 Q1 2017 Years with National Elections Post-Election Period Photo source: primer.com.ph

Gross Gr ss Do Domestic ic Pro rodu duct (GD GDP) ) Gr Growth th (%) %) 8.0 6.9 7.0 6.4 6.0 5.1 5.0 4.6 4.0 3.0 2.0 1.0 0.0 Q1 2011 Q12015 Q12016 Q12017 Source: Philippine Statistics Authority (PSA) Photo source: primer.com.ph

Demand Side Government Final Consumption Expenditure Growth (%) Household Final Consumption Expenditure Growth (%) 15.0 8.0 11.8 7.1 7.0 10.0 6.0 5.7 6.0 5.0 4.8 0.2 0.0 5.0 0.0 4.0 -5.0 3.0 -10.0 2.0 -15.0 1.0 -14.9 0.0 -20.0 Q1 2011 Q12015 Q12016 Q12017 Q1 2011 Q12015 Q12016 Q12017 Capital Formation Growth (%) Net Exports Growth (%) 35.0 0.0 31.5 -1.8 27.8 30.0 -50.0 25.0 -45.2 20.0 15.7 -100.0 15.0 7.9 10.0 -150.0 5.0 -158.4 -163.3 0.0 -200.0 Q1 2011 Q12015 Q12016 Q12017 Q1 2011 Q12015 Q12016 Q12017 Source: Philippine Statistics Authority (PSA) Photo source: johninthephils.blogspot.com

Supply Side Agriculture, Hunting, Forestry and Fishing Growth (%) Industry Sector Growth (%) 9.3 6.0 10.0 4.9 4.3 4.0 8.0 6.9 6.1 2.0 1.0 5.5 6.0 0.0 4.0 -2.0 2.0 -4.0 -4.3 -6.0 0.0 Q1 2011 Q12015 Q12016 Q12017 Q1 2011 Q12015 Q12016 Q12017 Service Sector Growth (%) 7.5 8.0 6.8 7.0 5.6 6.0 5.0 4.0 3.3 3.0 2.0 1.0 0.0 Q1 2011 Q12015 Q12016 Q12017 Photo source: ph.undp.org Source: Philippine Statistics Authority (PSA)