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Philippines Economic Update and Medium term challenges February 18, 2019
Transcript of Philippines Economic Update and Medium term …map.org.ph › wp-content › uploads › 2019 › 05...
Philippines Economic Update and Medium term challenges
February 18, 2019
Key Messages
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• Increased global uncertainties and high inflation have impacted growth performance in 2018.
• The economic growth prospect remains positive but uncertainties have increased.
• In the long term, the Philippines needs to accelerate capital accumulation and sustain high productivity growth to boost inclusive growth.
Recent development Increased global uncertainties and high inflation have impacted growth performance in 2018.
3
Economic growth moderated but
remains strong, driven by robust
investment growth
4
-6
-4
-2
0
2
4
6
8
10
12
14
2013 2014 2015 2016 2017 2018
Private Consumption Govt Consumption Investments
Discrepancy Net Exports GDP growth
Source: Philippine Statistics Authority (PSA)
5
Durable equipment and construction drove fixed capital
formation while national government ramped up
infrastructure spending.
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
2014 2015 2016 2017 2018
Perc
en
tage
po
int
Fixed Capital Formation Composition Contribution to GDP Growth
Intellectual Property ProductsBreeding Stock & Orchard Dev'tDurable EquipmentConstructionFixed Capital
486.5
728.1
2017 2018
PH
P B
illio
ns
NG Infrastructure and Other Capital Outlays: January to November
+49.7%
Source: PSA
Source: Department of Budget and Management (DBM)
6
Source: PSA
-40.0 -30.0 -20.0 -10.0 0.0 10.0 20.0 30.0 40.0
Nov-17
Jan-18
Mar-18
May-18
Jul-18
Sep-18
Nov-18
In p
erc
en
t
Exports Imports
Import growth remained strong while export growth
softened.
Source: PSA
Current Account balance (% of GDP)
Current account balance deteriorated sharply
in the first three quarters of 2018.
-0.4
-3.9 -3.7 -5.0
-4.0
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2014 2015 2016 2017 2018
Source: Bangko Sentral ng Pilipinas
Inflation increased rapidly and peaked on the
third quarter of 2018.
8
-2.0
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
Dec
-15
Mar
-16
Jun
-16
Sep
-16
Dec
-16
Mar
-17
Jun
-17
Sep
-17
Dec
-17
Mar
-18
Jun
-18
Sep
-18
Dec
-18
IN P
ERC
ENT,
YO
Y
Core Inflation Headline Inflation
Source: PSA
Food and Non-
Alcoholic Beverages
Housing, Water,
Electricity, Gas And
Other Fuels
Transport
Restaurants And
Miscellaneous Goods And
Services
Alcoholic Beverages,
Tobacco And Other
Vegetable-Based Tobacco
Products
5.2 2018 Average Inflation
52%
17%
10%
9%
6%
Fiscal policy remained expansionary
supported by strong revenue growth.
Source: DBM
15.1 15.8
15.2 15.7 16.9
15.7 16.7
17.6 17.9
20.0
-0.6 -0.9
-2.4 -2.2
-3.0
-3.5
-2.5
-1.5
-0.5
0.5
1.5
2.5
3.5
0.0
5.0
10.0
15.0
20.0
25.0
2014 2015 2016 2017 2018 Q1-Q3
Fisc
al b
alan
ce (
Perc
ent
of
GD
P)
Perc
ent
of
GD
P
Revenues Expenditure Fiscal Balance (RHS)
Growth outlook and risks The economic growth prospect remains positive but uncertainties have increased.
10
11
49
50
51
52
53
54
55
3.0
3.5
4.0
4.5
5.0
Jun-1
7
Se
p-1
7
De
c-1
7
Mar-
18
Jun-1
8
Se
p-1
8
No
v-1
8
Industrial production
New export orders (RHS)
Global growth is moderating.
0
2
4
6
8
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
World Advanced economies EMDEs
Percent
Source: World Bank, Global Economic Prospect January 2019
Philippine growth outlook (as of December 21, 2018)
12
6.1
6.9 6.2
6.5 6.6 6.6
0
1
2
3
4
5
6
7
8
9
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Actual and Forecast Growth (in percentage)
December 2018 Forecast Historical Growth
Forecast
Medium to long term challenges The Philippines needs to accelerate capital accumulation and sustain high productivity growth to boost inclusive growth.
13
Income per capita
2000 2017 2040
20
11
USD
5.3%
6.5%
43.1
33.7
0
2000 2015 2040
%
Poverty rate (USD 3.2/day)
Ambisyon Natin 2040 goals
0
10
20
30
40
50
Philippines Malaysia Thailand Indonesia Vietnam China
% o
f G
DP
Gross capital formation (1998-2016)
To achieve the goals, the Philippines
needs to
accelerate capital investment…
-6
-5
-4
-3
-2
-1
0
1
2
3 Contribution to Growth of Total Factor Productivity
1981-1986 1986-1991 1991-1996 1996-2001 2001-2006 2006-2011 2011-2016
%
and sustain high total factor productivity
growth.
0 1 2 3 4 5 6
Philippines
Thailand
Vietnam
Indonesia
China
Malaysia
(7 = market less dominated)
Through improving market
competition…
0
40
80
120
160
China Indonesia Philippines Thailand Vietnam Malaysia
Trade as a share of GDP (2000-2017)
Increasing foreign trade …
-2
-1
0
1
2
3
4
5
6
7
Philippines Indonesia Malaysia Thailand China Vietnam
Net FDI inflow: Philippines vs. Regional peers (% of GDP)
1999-2014 2005-2010 2011-2016
… increasing FDI to boost knowledge
spillover
0
2
4
6
Malaysia China Indonesia Thailand Vietnam Philippines
Ease of hiring and firing (7=best)
… and reducing labor market rigidities
Thank you!
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For questions please contact:
Rong Qian, Senior Economist, World Bank Philippines
Please find our monthly economic update here: http://www.worldbank.org/en/country/philippines
Or
http://www.worldbank.org/en/country/philippines/whats-new
