NEDA_Sec_Esguerra - Mindanao Shipping Conference 2016

8/17/2019 NEDA_Sec_Esguerra - Mindanao Shipping Conference 2016

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Philippine Macroeconomic Outlook,

Transport Directions, and Regional Developments

Emmanuel F. EsguerraSocioeconomic Planning Secretary

PISFA and PortCalls Shipping Conference

Davao City

27 April 2016


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Outline

I. Macroeconomic Trends

II. Near-term Growth Outlook and Risks

III. Transport DirectionsIV. Regional Developments


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Macroeconomic Performance


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-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1 9 5 5 - 1 9 6 0

1 9 5 6 - 1 9 6 1

1 9 5 7 - 1 9 6 2

1 9 5 8 - 1 9 6 3

1 9 5 9 - 1 9 6 4

1 9 6 0 - 1 9 6 5

1 9 6 1 - 1 9 6 6

1 9 6 2 - 1 9 6 7

1 9 6 3 - 1 9 6 8

1 9 6 4 - 1 9 6 9

1 9 6 5 - 1 9 7 0

1 9 6 6 - 1 9 7 1

1 9 6 7 - 1 9 7 2

1 9 6 8 - 1 9 7 3

1 9 6 9 - 1 9 7 4

1 9 7 0 - 1 9 7 5

1 9 7 1 - 1 9 7 6

1 9 7 2 - 1 9 7 7

1 9 7 3 - 1 9 7 8

1 9 7 4 - 1 9 7 9

1 9 7 5 - 1 9 8 0

1 9 7 6 - 1 9 8 1

1 9 7 7 - 1 9 8 2

1 9 7 8 - 1 9 8 3

1 9 7 9 - 1 9 8 4

1 9 8 0 - 1 9 8 5

1 9 8 1 - 1 9 8 6

1 9 8 2 - 1 9 8 7

1 9 8 3 - 1 9 8 8

1 9 8 4 - 1 9 8 9

1 9 8 5 - 1 9 9 0

1 9 8 6 - 1 9 9 1

1 9 8 7 - 1 9 9 2

1 9 8 8 - 1 9 9 3

1 9 8 9 - 1 9 9 4

1 9 9 0 - 1 9 9 5

1 9 9 1 - 1 9 9 6

1 9 9 2 - 1 9 9 7

1 9 9 3 - 1 9 9 8

1 9 9 4 - 1 9 9 9

1 9 9 5 - 2 0 0 0

1 9 9 6 - 2 0 0 1

1 9 9 7 - 2 0 0 2

1 9 9 8 - 2 0 0 3

1 9 9 9 - 2 0 0 4

2 0 0 0 - 2 0 0 5

2 0 0 1 - 2 0 0 6

2 0 0 2 - 2 0 0 7

2 0 0 3 - 2 0 0 8

2 0 0 4 - 2 0 0 9

2 0 0 5 - 2 0 1 0

2 0 0 6 - 2 0 1 1

2 0 0 7 - 2 0 1 2

2 0 0 8 - 2 0 1 3

2 0 0 9 - 2 0 1 4

2 0 1 0 - 2 0 1 5

6-yr moving average 6.2% 2010-2015 ave

Average growth in 2010-2015 is the highest 6-year average growth since the

mid-1970s.

Source: NEDA Staff calculations

1971-1976;

1972-1977;

1973-1978

2010-2015

4

in %Real GDP growth (6-year moving average)


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0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

1990-1999 2000-2009 2010-2015

Agriculture Industry Services

Supply Side

-2.0

-1.00.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

1990-1999 2000-2009 2010-2015

Consumption Government

Investment Net exports

Demand Side

Investment and industry are increasingly becoming major drivers of

GDP growth…

2.8%

4.5%

6.2%

2.8%

4.5%

6.2% Ave. growth

Structural transformation taking place


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Fourth Quarter FY

2014 2015 2014 2015

Supply side

Agriculture 4.2 -0.3 1.6 0.2

Industry 9.1 6.8 7.9 6.0

o.w. Manufacturing 7.7 6.6 8.3 5.7

Services 5.6 7.4 5.9 6.7

Demand side

Private consumption 5.0 6.4 5.4 6.2

Government consumption 9.4 17.4 1.7 9.4Capital Formation 3.0 13.5 5.4 13.6

o.w. Fixed capital formation 8.0 22.5 6.8 14.0

Exports 12.8 7.1 11.3 5.5

Imports 9.9 13.3 8.7 11.9

GROSS DOMESTIC PRODUCT 6.6 6.3 6.1 5.8Source: Philippine Statistics Authority (PSA)

Growth of GDP by Component (%)

Recent performance indicates that the economy is steadily growing despite

the initial slowdown

Favorable Macroeconomic Trends


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Source: Philippine Statistics Authority

Our vibrant economy is producing more and better jobs...Unemployment and Underemployment rates

(%)

Employment Generated 2000- Jan 2016 (‘000)

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

c/ FY 2015 employment generation estimate is the average of April, July and Oct excluding Leyte data

d/ January 2016 employment generation estimate excludes the province of Leyte.

*1997-2005: Adoption of population projection benchmark is based on the results of the 1995 Census

**2006-current: Adoption of population projection benchmark based on the results of the 2000 Census

18.8

19.3

20.0

19.3

18.4 18.5

19.7

7.4

7.0 7.07.1

6.6

6.3

5.8

5.5

6.0

6.5

7.0

7.5

16.0

17.0

18.0

19.0

20.0

21.0

22.0

2010 2011 2012 2013 2014a/ 2015b/ Jan

'2016

U n e m p

l o y m e n t R a t e

U n d e

r e m p

l o y m e n t R a t e

Underemployment (%) Unemployment (%)

3,7823,448

4,310

183

75250.3

51.9

56.7

59.3

63.2

45

50

55

60

65

-

1,000

2,000

3,000

4,000

5,000

2000-2004 2005-2009 2010-2014 2015c/ Jan '2016d/

W a g e a n

d S

a l a r y W o r k e r s

( % i n T o t a

l

E m p

l o y m e n t )

E m p

l o y m e n t G e n e r a t e

d

Employment Generated ('000)

Wage and Salary Worker (% in Total Employment)


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0.0

1.0

2.0

3.0

4.0

5.0

6.0

J

- - a r - 3

p r - 3

a y -

J u n - 3

J l -

u - 3

- c t - - c -

J

- - r - r - -

J

- J l - -

S e p -

c t -

o v -

e c -

J a n - 5

F e b - 5

r - r - -

J

- J l - - -

c t - - c -

J

- - a r - 6

Core Inflation Headline Inflation

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

NPL

Ratio, LHS*

Real interest

rates, RHS**

CAR, RHS***

* as of Jan ’16 ** as of Jan ’16 *** as of Q3 2015

Headline and Core Inflation, Jan 2013- March 2016

Monetary and financial conditions fully support growth

Real Interest Rate and Non-performing Loans

(NPLs), 2005- 2016


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Robust External Position

1070

2007

32153737

5740 5724

-60

-40

-20

0

20

40

60

80

100

0

1000

2000

3000

4000

5000

6000

7000

2010 2011 2012 2013 2014 2015

Increasing Net FDI

Net FDI (US$ million)

growth (%)

26.5

2.9

0.0

2.0

4.0

6.0

0.0

20.0

40.0

60.0

80.0

Positive Current Acct. &Declining External Debt

External Debt to GDP ratio - LHS

Current Account to GDP Ratio - RHS

0

500

1,000

1,500

2,000

0

10,000

20,000

30,000

2 0 0 0

2 0 0 1

2 0 0 2

2 0 0 3

2 0 0 4

2 0 0 5

2 0 0 6

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

2 0 1 2

2 0 1 3

2 0 1 4

2 0 1 5

Continuous remittances amidstslowdown in deployment

Cash Remittances

(US$mn), LHS

OF Deployment

('000), RHS

125.1

85.0

47.5

8.6 7.5 6.5 3.4 2.0 1.4 -8.6

-20

0

20

40

60

80

100

120

140

TH TW PH ID VN SG IN CH KR MY

Average Growth of FDI, 2012-2014


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10

Our stronger fiscal position has been recognized, earning an

investment-grade status from major CRAs for the first time in 2013

• Modest fiscal deficit; Declining Public debt & interest payments; Increasingreliance on domestic financing

• Result: resilient fiscal position

Fiscal side:

Fiscal Position

National Government Borrowing Program (%)

Share of expenditures allocated to interest payments

-7.00

-2.00

3.00

8.00

13.00

18.00

Fiscal Position Revenue Effort Tax Effort

National gov’t outstanding debt (% of GDP)

13.9

0.0

5.0

10.0

15.020.0

25.0

30.0

35.0

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

64.6 65.6 65.283.6

93.9

72.157.6

75.584.5

35.4 34.4 34.816.4

6.1

27.942.4

24.515.5

0.0

20.0

40.0

60.0

80.0

100.0

2009 2010 2011 2012 2013 2014 2015 as of Feb

2016

2016

ProposedDomestic Foreign

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 end

Feb

2016


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Near-term Growth Outlook and Risks


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The Philippines is expected to remain one of the fastest

growing economies in Asia

GDP Growth of Selected Asian Economies

(FY2015, FY2016f & FY2017f)

Source: IMF-WEO.12

7.5

6.96.7

5.8

5.04.8

2.8

2.0

7.5

6.3

5.86.0

4.5

5.1

3.2

2.9

7.5

6.0 6.06.2

5.0

5.5

3.6

3.2

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

India Chin a Vietnam Philippines Ma laysia Indonesia Thailand Singap ore

2015 2016 2017


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The vibrant view on the Philippine economy is also shared by

the private sector.

Source: Various sources, as of 13 April 2016

Consensus Forecast, Real GDP growth (in %)2016 2017

ADB 6.0 6.1

Barclays 5.5 -

Citi 5.4 6.0

Fitch rating 6.0 6.0

Goldman Sachs 6.0 -HSBC 5.8 5.8

IMF 6.0 6.2

Metrobank Research 6.3 -

Moody’s 6.0 6.0

Nomura 6.5 -

Standard and Poor’s 6.0 6.3

Standard Chartered Bank 5.7 5.8

UNESCAP 6.3 -

WB 6.4 6.2

Median 6.0 6.0

Mean 6.0 6.0


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Expected Drivers of Growth

Demand side

Household consumption: remittance inflows, strong consumer confidence, low

inflation, low interest rates

Government spending: expansion of social protection programs (i.e. CCT, K-

12, Philhealth coverage, etc)

Investment: public construction, including infrastructure and reconstruction;

private construction Exports of services: good prospects for BPM and tourism

Supply s ide

Lower petroleum prices

Business Process Management (BPM) fueling growth in the real estate,

renting, and business activities sector

Construction and infrastructure development

International and domestic tourism

Wholesale and retail trade

Manufacturing resurgence 15


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Fragile growth in Japan Slowdown in large emerging economies, particularly China Asynchronous monetary policies in major developed

economies

Geopolitical tensions in the Middle East, extended periodof low oil prices Maritime dispute in the West Philippine Sea

Risks to Growth

External

Domestic

Natural hazards including the current El Nino phenomenon

Possible La Nina in the second semester of 2016 Disruptions in the peace process Delays in infrastructure and reconstruction projects Logistics bottlenecks And thin power reserves (potential impact of El Nino on

hydropower)

16

We remain vigilant and well- positioned against the downside risks to

growth


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Transport Directions in the Medium Term


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Growth-enhanced fiscal space has allowed major investments in

infrastructure with spending on infrastructure more than tripling...

Source: Department of Budget and Management

Public infrastructure spending, Bn PhP and % of GDP

306.9346.2

595.8

766.5876.6 1018.7

2.72.7

4.3

5.05.2 5.4

0

1

2

3

4

5

6

0

200

400

600

800

1000

1200

2013 2014 2015 2016 2017 2018

Actual (2013-2014)/Program(2015)/Proposed(2016)/Projections(2017-2018) Ratio to GDP (rhs)


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Source: Comprehensive & Integrated Infrastructure Program (CIIP) : PhP7 .27Tn (as of December 2015)

Total Infrastructure Investment by Sector(2013-2016 and beyond)

Bulk of which are slated for transportation, social, and energy

infrastructures..

Top 10 Agencies with the Largest InvestmentRequirements in the CIIP

ICT

0.01Other Public

Infrastructure

0.04

Water

Resources

0.14

Energy

0.18

Social

Infrastructure

0.20

Transportation

0.43

Rank Name of Agency # of ProjectsInvestment Cost

(in Billion PhP)

1 DPWH 323 2,269.35

2 DOTC 588

1,397.763 DOE 275 1,327.06

4 DOH 39 503.71

5 DepEd 7 310.77

6 OPAFSAM 258 234.87

7 BCDA 14 210.22

8 HUDCC 10 173.67

9 DILG 25 131.50

10 DA 108 98.91

Total 1647 6,657.83

Share of Top10 Agencies to Total Infra

Investments =

91.61% of all CIIP

projects


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These projects are funded mostly by the national government…

[CELLRANGE]

[CATEGORY NAME]

[PERCENTAGE]

[CELLRANGE]

[CATEGORY NAME]

[PERCENTAGE]

[CELLRANGE]

[CATEGORY NAME]

[PERCENTAGE]

Comprehensive and Integrated Infrastructure Program (CIIP), by Funding SourceTotal Infrastructure Investment of PhP7.27 trillion;

Years: 2013-2016 and Beyond

Source: Comprehensive & Integrated Infrastructure Program (CIIP) : PhP7 .27Tn (as of December 2015)


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…complemented by private investments in public infrastructure.

Status of PPP Projects (as of 01 April 2016)

Source: PPP Center

Projects by Status No. of ProjectsAmount

(PHP bn)

Projects Under Implementation

Contract Awarded 12 196.53

Other projects under Implementation 2 106.73

PPP Pipeline

Projects under Procurement 15 579.76

For Approval of Relevant Government Bodies 5 101.94

For Finalization of Project Structure 1 536.03Projects with Ongoing Studies 3 47.93

Projects Under Conceptualization/Development 13 NA

Total 51 1,568.92


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Underpinned by stronger links between Investment

Programming and Budgeting

Update of the

Comprehensive andIntegrated

Infrastructure Program(CIIP), at least once a

year.

Implementation ofThree Year

Infrastructure RollingProgram (TRIP) by July

2016


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Multimodal Transport

• Multimodal Transport Framework is vital in

ensuring that multimodal transport systems

are developed as seamless networks

servicing all nationally strategic important

corridors, and implemented in a timely

manner.


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Recent Efforts for Transport Systems Development

Program/Study Focus AreaSurvey on Mindanao Logistics

Infrastructure Network (SMLIN)

Logistics Infrastructure System in Mindanao

Department of Tourism (DOT)- Department

of Public Works and Highways (DPWH)

Convergence Program (Convergence

Program)

Logistics Infrastructure providing road access

to/from tourist destination areas and other

transport infrastructures such as ports and

airports

Master Plan on High Standard Highway

(HSH) Network Development

Road network and routes for HSH within the

sphere of 200-km radius from Metro Manila and

select corridors in Davao to meet future traffic

demand.

Data Collection Survey on Disaster-

Resilient Feeder Ports and Logistics

Network

Disaster-resilient network of feeder ports to

ensure a secure and smooth logistics even in

time of disaster


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Multimodal Transport Framework• ASEAN Framework Agreement on

Multimodal Transport

The agreement recognizes the need todevelop an economic and efficient

multimodal transport services to expand

trade between member states and third

countries.


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2012 2014

International LPI score 3.02 3.0

Customs 2.63 3.0

Infrastructure 2.8 2.6

Ease of arranging shipments 2.97 3.33

Quality of logistic services 3.14 2.93

Tracking and tracing 3.3 3.0

Timeliness 3.3 3.07

Philippines’ Logistics Performance, by area

Source: World Bank Logistics Performance Index


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Regional Developments: Davao Region


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Efficient logistics are required to support the following

priority industry clusters in Davao Region:


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Current issues on sea transport:

• Limited capacity of Mindanao seaports, including

berthing structure, transit/cargo shed area for non-

containerized cargo, container yard for containerized

cargo and passenger terminal building.

• Need to reduce domestic cargo rates as rates in

Mindanao are more expensive than foreign cargo rates


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Mindanao Spatial Strategy/Development

Framework (MSSDF)

• Position the Davao Region to be the Southeast Asia

and Pacific Logistic hub of Mindanao

• Metropolitan Davao to serve as the island’s

international trading center with direct international

linkages through sea and air


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ASEAN Economic Community

• With Mindanao playing a critical role in the AEC, the

following sea linkages shall be established or enhanced:

– Zamboanga-Sandakan (Malaysia)

– Davao/General Santos-Bitung, Manado (Indonesia)

– Zamboanga-Muara (Brunei)

– Tawi-tawi-Tarakan (Indonesia)


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Three-year Rolling Infrastructure Program (TRIP) :

Region XI Major Transport Projects

Project Agency Output Province Project Cost(PhP Bn)

Status

Mawab-Maragusan-Caraga Road,

Davao Oriental 1st LD, Compostella

Valley 1st LD, Compostella Valley

2nd LD

DPWHConstruction of 86.84 km

road project

Compostela

Valley5.59 Bn Ongoing

Matanao-Kiblawan-Padada Road

incl. Bridge, Davao del Sur 2nd LDDPWH

Construction of 54.343 km

road projectDavao del Sur 1.82 Bn Ongoing

Davao city Bypass Construction DPWHConstruction of 37.17 km

road, 2.28 km Tunnel & 5.13

lm Bridge

Davao del Sur 16.81 Bn Proposed

Dnas-Laak Rd DPWHConstruction of 64 km roadproject

Compostella

Valley2.12 Bn Proposed

Maragusan-Pantukan Rd DPWHConstruction of 54 km road

project

Compostella


Nabunturan-Laak Rd DPWHConstruction of 52.34 km

road project

Compostella

Valley

1.73 Bn Proposed


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Status

Laak-Malaybalay City Rd DPWHConstruction of 46 km road

project

Compostella


Jct. Davao Diversion Rd-Tigatto-

Mandug-Callawa-Fatima-Malabog Rd-Valencia

DPWH Construction of 95.805 kmroad project Davao del Sur 4.14 Bn Proposed

San Agustin- Sto. Niño-Kisulad-

Tubalan Port RdDPWH

Construction of 30 km road

projectDavao del Sur 1.44 Bn Proposed

Carahayan-Alegado-Glan Rd DPWH


project Davao del Sur 3.11 Bn Proposed

Nuing-San Isidro-Molmol-

Lagimit-Big Margus-Glan RdDPWH



Balut Island Circumferencial Rd DPWHConstruction of 55 km road



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Status

Sarangani Island

Circumferencial RdDPWH Construction of 65 km road project

Davao del

Sur3.58 Bn Proposed

Pangian-Pinalpalan-Demolok Rd (Malungon,

Sarangani Province

Boundary)

DPWH Construction of 25 km road projectDavao del

Sur1.11 Bn Proposed

Mati-Lupon-Manay Rd DPWH Construction of 36.115 km road projectDavao

Oriental1.72 Bn Proposed

Davao Sasa Port

Modernization PPP

Project

DOTC/PPA

Modern container port with 2700 ground

slots and capable of handling up to 9000

TEU ships

Davao City 2.50 BnProcurem

ent Stage

Sugarcane Farm-To-Mill

Roads (FMR) with Block

Farms - Region XI

SRA 185 km. FMR

Davao del

Sur, Part of

South

Cotabato

2.20 Bn Proposed


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Philippine Macroeconomic Projections,

Transport Direction, and Regional Developments

Emmanuel F. EsguerraSocioeconomic Planning Secretary

PISFA and Portcalls Shipping Conference

Davao City

27 April 2016

Documents

NEDA_Sec_Esguerra - Mindanao Shipping Conference 2016