40
ATENEO CENTER FOR ECONOMIC RESEARCH AND DEVELOPMENT Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City 25 January 2018 Cielito F. Habito Professor of Economics Ateneo de Manila University

Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

  • Upload
    others

  • View
    7

  • Download
    0

Embed Size (px)

Citation preview

Page 1: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

ATENEO CENTER FOR

ECONOMIC

RESEARCH AND

DEVELOPMENT

Philippine Economic Performance &

Outlook

Eagle Watch Economic BriefingAteneo Rockwell, Makati City

25 January 2018

Cielito F. HabitoProfessor of EconomicsAteneo de Manila University

Page 2: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Storyline1. The economic momentum continues.

2. Investment, trade and manufacturing sustain a 7-year surge.

3. There’s less trabaho, but more negosyo.

4. Government spending (esp infra) is crucial.

5. MSMEs are key to our inclusive growth.

6. There are risks & challenges we must address.

7. PH is poised to grow faster and stronger.

Page 3: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

1. The economic momentum continues.Dynamism and stability remain, unlike in past post-election years.

Page 4: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

PiTiK Test in 7

Presyo: Inflation well within target (2017: 3.2%)

Trabaho: Less trabaho, more negosyo (Oct 7 Unemp Rate: 5.0%)

Kita: 2017 GDP growth of 6.7% (Among Asia s fastest)

Page 5: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Presyo, 2017

Inflation Trends

9.3%

3.2%3.8%

4.4%

3.2%2.9%

4.2%

Malaysia – 3.8% Indonesia – 3.8%

Vietnam – 3.5%

1.4% 1.8%

3.2%

Page 6: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Jobs Decline TapersBut Quality Improving

Trabaho, 2017

Page 7: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Kita, 2017

PH: Among the fastest GDP Growth Rates in Asia

Graphic: NEDA

Page 8: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Kita, 2017

Industry: Strong DriverAgriculture Reverses Last Year s Decline

Graphic: NEDA

Page 9: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Graphic: NEDA

Kita, 2017

Demand Side: Internal & External Boost

Page 10: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

The Growth Momentum is Sustained

Graphic: NEDA

Page 11: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

2. Investment, trade & manufacturing sustain a 7-year surge.Growth shift began in 2010.

Page 12: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

1.8

-1.8

6.2

12.0

15.8

10.5

-5.0 0.0 5.0 10.0 15.0 20.0

2010-2017

2004-2009

Source: PSA

Investment Spending: A 7-Year Roll

Private Construction

Durable Equipment

Fixed Investment

Growth Rate (%)

Page 13: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

PH exports to ASEAN zoomed with AFTA.

0 100 200 300

Mineralfuels,oils,distillation

Essentialoils,perfumes,

Cereal,flour,starch,milk

Miscellaneouschemicalproducts

Ediblefruit,nuts,peelofcitrus

Vegetable,fruit,nutetc.food

Miscellaneousedible

Tanning,dyeingextracts,

US$Millions

PHExportstoMalaysia,2003vs.2013

2013level

2003level

0 50 100 150

Machinery,nuclearreactors,boilers,etc.

Optical,photo,technical,medical,

etc.apparatus

Mineralfuels,oils,distillationproducts,etc.

Animal,vegetablefatsandoils,cleavageproducts,etc.

Furniture,lighting,signs,

prefabricatedbuildings

Soaps,lubricants,waxes,candles,modellingpastes

US$Millions

PHExportstoIndonesia,2003vs.2013

2013level

2003level

0 2 4 6 8 10

Organicchemicals

Ediblefruit,nuts,peelofcitrusfruit,melons

Cereal,flour,starch,milkpreparationsandproducts

Articlesofironandsteel

Soaps,lubricants,waxes,candles,modellingpastes

Vegetable,fruit,nut,etc.foodpreparations

Ores,slagandash

US$Millions

PHExportstoVietNam,2003vs.2013

2013level

2003level

THAILAND MALAYSIA

VIETNAMINDONESIA

Page 14: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Trade has resumed growthExport growth nearly doubled (and

goods exports are back on top)Goods exports now growing faster again

Page 15: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Manufacturing ResurgenceGrowing faster than overall economy

Page 16: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Manufacturing, 2017:

Winners• Fab. Metal Prods. (50.3%)

• Basic Metal Prods (23.5%)

• Non-met Minerals (21.6%)

• Furniture & Fixtures (20.4%)

• Office Equipment (16.5%)

• Petroleum/Fuel (12.5%)

• Transport Equipt (12.4%)

• Radio/TV/Comm Eqpt (12.1%)

• Footwear/Leather• Chemical Products

• Misc Manufactures

Losers• Textiles (-19.7%)• Tobacco Mfg• Wearing Apparel

• Electrical Machinery • Wood Etc Prods• Food Manufactures• Paper/Paper Prods• Publishing/Printing

• Non-elec Machinery• Rubber & Plastic Prods• Beverages

.

Page 17: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

. There s less trabaho, but more negosyo.

Job quality is improving.

Page 18: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Job Quantity Lower, But Job Quality Better

• Total no. of jobs dropped by 134,000 (but reduction is tapering off)

• 1M Filipinos enter working age (15 years) every year

• Even so, unemployment rate fell from July to Oct due to lower LFPR (most still in school due to K+12)

• Wage & salary workers continue to rise (due to manufacturing surge); underemployment now < 16%

• Entrepreneurs (self-employed who employ others in a business) have risen

Page 19: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Unemployment rate falls, even as jobs decline (but tapering)

Underemployment on downtrend?Hundreds of

thousands of new jobs generated in

industryUnderemployment continues decline

Page 20: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Wage Employment, Entrepreneurship are expanding

Page 21: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

4. Government spending (especially in infra) is crucial.Growth driver in 2017, especially Q4

Page 22: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Government spending was a key growth driver in Q4…

Page 23: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

…and will be the prominent growth driver in the years ahead

• Direct employment and multiplier effect

• Attraction for long-term private investment

Page 24: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

5. MSMEs are key to our inclusive growth.Major economic agenda in our ASEAN Chairmanship.

Page 25: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

MSMEs Contribution to GDP (%)

Page 26: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

MSMEs Employment Contribution (%)

Page 27: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

MSME Development:Starved of Financing

Page 28: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

PH SME bank financing is pathetically low, compared to

our neighbors

Page 29: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

7 M s of MSME Development1. Mindset – government, banks, and

entrepreneurs themselves

2. Mastery – business & financial management

3. Mentoring – DTI Roving Academy, DBFTA; NGOs

4. Money – financial inclusion (LBP, DBP refocus)

5. Machines – SETUP, SSFs, financing programs

6. Markets – infra, clustering, e-commerce, TF

7. Models – inclusive value chains vs. vertical integration

ASEAN More MSME-friendly regional environment

Page 30: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

PH AEC 2025 GameplanInternationalizing MSMEs

Page 31: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

6. There are risks and challenges we must address.Both external and internal issues

Page 32: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Medium Term Downside Risks

• Implementation shortcomings (BBB)

• Political distractions and weakened institutions

• Slowing remittances and BPO sector growth

• Inflationary pressures from self-fulfilling (exaggerated) expectations

• Loss of momentum in completing the tax reform program

• Trade slowdown due to TPP exclusion

Page 33: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

1996 2006 2016

Metro Manila

Metro Manila + Central Luzon + CALABARZON

Luzon

Persistent Challenge:We re even more Manila- & Luzon-centric now

SHARE OF GDP

Page 34: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Persistent Challenges• Falling farther behind in exports, and still

lagging in FDI

• Weakness in agriculture & agribusiness

• Fiscal pressures from hiked public investments, downscaled PPP, and populist policies (free tuition, irrigation)

• Non-passage of Basic Bangsamoro Law and lack of lasting peace in Mindanao

• Inferior telecommunications quality and Internet speed

Page 35: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

External Risks (IMF)

Graphic: IMF

Page 36: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

7. PH is poised to grow faster and stronger.But we must do the homework right

Page 37: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

IMF World Economic Outlook Global economy is expected to pick up in

2018-2019 (3.9% GDP growth)

Graphic: IMF

PH will do better!

Page 38: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Short Term Outlook (2018)

Inflation Rate: 3.0-4.0%

Jobs: Employment Rate of 94-95% (Unemployment Rate 5-6%)

GDP Growth: 6.5-7.5%, with downside risks

Exchange Rate: P50-52/$1

Page 39: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

The Way Forward

For sustained growth:

Build, build, build implementation

Ease trade and investment restrictions; negotiate more trade deals

Regulatory reform

For inclusive development:

Concerted MSME promotion and support

Inclusive value chains (vs. vertical integration)

Strong competition policy enforcement

Investments in human development & social protection

Page 40: Philippine Economic Performance & Outlook · Philippine Economic Performance & Outlook Eagle Watch Economic Briefing Ateneo Rockwell, Makati City ... Inflation well within ... •

Follow us on the following Social Media Platforms

Ateneo Eagle Watch

@admueaglewatch

Ateneo Eagle Watch

@ADMUEagleWatch

[email protected]