Economic Outlook 2015 Dr Victor Abola

8/21/2019 Economic Outlook 2015 Dr Victor Abola

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Fast Track

ToRepair Bay

PH ECONOMIC FAST TRAIN--

BACK ON TRACK .... ORDERAILED

FMIC ECONOMIC BRIEFINGJanuary 9, 2015

Victor A. Abola, Ph.D.


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Domestic Demand-led Growth

Slowdown in 2014-to Q3

Can PH Get Back into Fast

Track in Q4, 2015?

Domestic Demand Outlook

External Demand Outlook

Macroeconomic Forecasts Summary .


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From 8.3% in 2012, and faster in 2013, but slowed in 2014

Robust Domestic Demand

But this has slowed down Faster pace of inflation

Typhoon Yolanda’s Impact on

Productive Capacity Under-spending of the NG


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Source of Basic Data: National Statistical Coordination Board (NSCB)

GDP Growth on Acceleration Mode, Sputtered til Q3-2014

GDP GROWTH RATE (Quarterly, y-o-y)2001-Q1 to 2014-Q3


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From 8.3% in 2012, and faster in 2013, H1 has slowed

Robust DomesticDemand Faltered

2013 2014-H1

Domestic Demand: 10.4% 4.7%

Spending view: Consumption Spending 5.7 5.6

Government Spending 7.7 0.8

Investment Spending 29.9 3.8 Construction 10.4 2.1

.


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Resurgence in Manufacturing

Japanese and Koreans Coming Back

Sources of Basic Data: NSCB, NSO


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Net New Jobs Created (000) Year Ending Survey Month

Past 3 quarters employment data in 2014 is in-linewith low tar et of 1M

Source of Basic Data: National Statistics Office (NSO)

Low Target of 1 M jobs per year Annual increase in labor force 1.15M


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Inflation Has Risen… But Within Target

2012 3.2%

2013 3.0%

2014 4.1%

Low Inflation: Monthly Inflation peaked at 4.9% in July-Aug. Still on Target

Source of Basic Data: NSO

Target

Record oilprices &rice crisis


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91-day T-bill and 10-year T-bond Yields(May 2005 – October 2014)

Source of Basic Data: Bureau of the Treasur BTrInflation Acceleration Had Pushed Up Interest Rates Slightly

UITF

Crises Global FinancialCrisis

MENACrisis


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Part II

Can PH Get Back into the Fast T

in Q4 & 201

.

Domestic Demand Outlook

External Demand Outlook .


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A. Domestic Demand Outlook

Consumer Spending 2013 2014

H1

2014

H2

2015

Qualitative Factors

Jollibee (11.2 to 12.2 , SM

Malls (0 to 18 ) , Other Food

Survey

Stronger

than H1

Even stronger

than H2

Due to: Lower

inflation

•Lower

inflation

•Election

spending

Growth Rate 5.7 5.6 5.8 6.5


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Gov’t onsumption

Spending

2013 2014

H1

2014

H2

2015

Growth Rate 7.7 0.8 4.8 6.6

Qualitative Factors

Overall: Extreme reaction

to PDAF, DAP has played

out; more spending expected

Stronger

than H1

Even stronger

than H2

Due to:

Lower

inflation

•

Lower

inflation

•Election

spending

•Recovery from

underspending

(PDAF, DAP)



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Investment Spending

2013 2014

H1

2014 H2 2015

Qualitative Factors:

Car sales: (24.8 , 37.7 ),

Capital Goods Imports (-9.4 ,

+5 )

Stronger

than H1

Even stronger

than H2

Due to:

Lower

inflation

•Lower interest

rates

•Faster Infra

spending

•Imports of

power plants,

telecoms,

aircraft

Growth Rate 29.9 3.9 9.0 14.0



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Pick up of pace in Q4 gets into higher gear in 2015

Domestic Demand Recovery 2013 2014-H1 2014-H2 2015

Domestic Demand: 10.4% 4.7% 6.5% 7.5%

Spending view:

Consumption Spending 5.7 5.6 5.8 6.5

Government Spending 7.7 0.8 4.8 6.6

Investment Spending 29.9 3.8 9.0 14.0 Construction 10.4 2.1 6.0 16.0

Basis for 2015 Consumption Spending: Weak Peso & Exports, Election,

Low Oil prices Government Spending: Reconstruction

Investment Spending:

Public Construction – Infra & Reconstruction

Durable Equipment - Utilities Property, Airlines, Mfg


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Within New, LowerTarget Inflation…

2013 3.0%

2014 4.1%

2015 2.7%

Inflation Eases to 4.1% in Q4, and 2.7% in 2015// Limits interest rates rise

Source of Basic Data: NSO

New Target

Record oilprices &rice crisis


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B. The World Economy’sin 2015 Recovery

Focused on US

US to grow 3.1%

Eurozone down to +1.3%

More oil output

from US, Canada,

Saudi Arabia, Libya


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MENA & Crude Oil Prices (WTI)Jan 2000-Dec 2015*

Source of Basic Data: US Energy Information Administration

Forecast

2014 2015 WTI 93.82 62.75

(4.1%) (33.1%)

Brent 99.54 68.08 (8.4%) (31.6%)

Savings: $3.25 B+ Domestic Spending P220 Bor +1.2% to GDP Growth


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OPEC Surplus Capacity & WTI Crude Oil Price

2002-2012

Average at

2.5 MMB/day

Source: US Energy Information Administration

Saudi Arabia, Libya, Iran Output

H i S


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Housing Starts

Housing starts for Oct 1045,

Nov 1028

Starts have exceeded 1.0 Million

units in 7 of last 12 months


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US

Job New Creation

Jobs increased 321,000 (Nov)and 243,000 (Oct), and has

exceeded 220,000 in 8 out of last12 months

250,000+ jobs/mo.

needed for strong

recovery


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Source of Basic Data: BLS

US Net New Jobs Created (000)

New Jobs Created per month

Exceeded 220,000 in 8 out of last 12 months


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US GDP Growth to hit long-term trend of 3% by 2015

Source: WEO, October 2014

PH Exports Growth

2013 5.4% 2014-H1 4.7%

2014-H2 9.2%

2015 12.0%


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Grew annually by 28%, now employs 1.0 MM people


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Tourist Arrivals (2001-2013)

11.3%

9.1%

9.6%

Source of Basic Data: Department of Tourism (DoT)

New Hotel Rooms Up or Under Construction

Tourist Arrival for Jan-October 2014 √ 3.95M or 2.3% (y-o-y). For 2015,

we expect a 10% rise.


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Awarded PPP Projects

as of December 2014

Data and photos from PPP Center Website

Awarded & in Progress P127.4 BExpected Work in 2015 P 44.3 B


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Part III. Macroeconomic Forecasts

GDP growth to accelerate due to Infra, PPP

Reconstruction Work + Low Oil Prices

2012 2013 2014 2015

Inflation Rate (% ∆) 3.2 3.0 4.3 2.7

Peso-Dollar Rate (end) 41.50 44.41 44.80 45-47

Gross Int'l Reserves ($B) 84.5 83.2 80.0 86.0

GDP Growth Rate 6.8 7.2 6.0 7.5

Industry Sector 6.8 9.5 7.6 11.0 Services Sector 7.6 7.1 5.9 7.2


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Summary Domestic Demand Slowed

Down in Q1-Q3 2014

Domestic Demand will Pick up Pace in Q4and will get into higher gear in 2015

US Recovery is Solid &Boost External Demand

GDP growth to accelerate due to stronger

Domestic and External Factors

1.2% Added Growth Dueto Low Crude Oil Prices


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Fast Track

ToRepair Bay

PH ECONOMIC FAST TRAIN--

BACK ON FAST TRACK .... ORSLOWDOWN TO REPAIR BAY

Victor A. Abola, Ph.D.

FMIC ECONOMIC BRIEFINGJanuary 9, 2015 Victor A. Abola, Ph.D.

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Economic Outlook 2015 Dr Victor Abola

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