THE PHILIPPINE ECONOMY: Recent Performance and Long-Term Outlook. Undersecretary Rolando G. Tungpalan 17 February 2016

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1 THE PHILIPPINE ECONOMY: Recent Performance and Long-Term Outlook Undersecretary Rolando G. Tungpalan 17 February 2016

2 Favorable Macroeconomic Trends The Philippines has been on a higher growth trajectory since the beginning of the current decade GDP in 2000 prices, trillion Php, Real GDP growth 6.2% ( ) 5.8% (2015) 6.1% (2014) 7.1% (2013) Structural break of potential real GDP at around Source: PSA 2

3 Structural transformation takes place Investment and industry are increasingly becoming major drivers of GDP growth Ave. growth Demand Side 6.2% Supply Side 6.2% % 4.5% % 4.5% Consumption Government Investment Net exports Agriculture Industry Services

4 Structural transformation takes place The economy is now on a higher growth trajectory with increasing contribution from the manufacturing sector Manufacturing contribution to Growth Industry Development is Getting A Big Push Industry Roadmaps: 35 total sectoral roadmaps, 29 of which are completed (such as manufacturing, chemicals, copper products, rubber products, IT-BPM, electronics, aerospace, among others) while 6 are still being finalized. These sectoral roadmaps are the building blocks of the Manufacturing Industry Roadmap (MIR) and the Comprehensive National Industrial Strategy (CNIS Manufacturing Resurgence Program - will rebuild the existing capacity of industries, strengthen new ones, and maintain the competitiveness of industries with comparative advantage. The goals: close the gaps in the supply chain, provide access to raw materials, and expand domestic markets and exports.

5 Sound Government Finances Growth-enhanced fiscal space has allowed major investments in infrastructure with spending on infrastructure more than tripling Public infrastructure spending, Bn PhP and % of GDP Actual ( )/Program(2015)/Proposed(2016)/Projections( ) Ratio to GDP (rhs) Source: Department of Budget and Management 5

6 Gross Regional Domestic Product, 2012 to 2014 (at constant 2000 prices) % 14.3% 14.4% 12.7% 35.7% 12.5% 36.4% 12.4% 36.3% 10.5% 10.4% 10.3% 9.3% 17.4 % 9.1% 17.3% 9.3 % 17.2%

7 City-driven economic growth Urban areas account for 75-80% of GDP Manila alone contribute a third of total GDP Incomes are 2.3 times that in rural areas Proliferation of urban settlements 326 cities and urban municipalities Exposure to risks associated with climate change due to being near or along the coast Impact of Urbanization to the Economy Despite lower poverty incidence in urban areas, urban poor remains vulnerable Low poverty incidence Large segment is above poverty line and vulnerable to slipping back to poverty Rising informal settlements Pressure on Urban Infrastructure Widening demand-supply gap in urban infrastructure services Housing problems Traffic congestion

8 Projected Population for Selected Age Groups, Philippines: AGE/SEX Total Population and over and over Female Source: PSA

9 Projected Population for Selected Age Groups, Philippines: AGE/SEX Total Population and over and over Female

10 To ensure inclusivity, the Philippine Development Plan is more responsive to the needs of sectors so that they can be assured of access to development opportunities. Indicators Actual Annual Plan Target Poverty Incidence 25.8 a/ n.a Unemployment rate (in %) 6.6 b/ 6.3 c/ Employment generated (in 000) 1,253 b/ 183 c/ Underemployment rate (%) 18.4 b/ 18.5 c/ GDP Growth Rate Agriculture Industry Services Notes: a/ Poverty estimates for 2014 were generated from the 2014 APIS, which does not include sample households from Batanes and Leyte ; b/ FY 2014 LFS estimate is the average of April, July and October rounds excluding Leyte data; c/ Jan to Oct 2015 estimates exclude Leyte; FY 2015 data averages the four rounds of the LFS except for employment generation; Jan 2015 employment generated data cannot be computed due to break in data series; Source: Philippine Statistics Authority

11 How do we keep the momentum in 2015 and beyond? Close the infrastructure gap Maintain high levels of public investments in human capital, particularly in health and education Invest in disaster resiliency Promote more sustainable production and consumption patterns Strengthen institutions Promote healthy competition Foster innovation culture Encourage entrepreneurship 11

12 Filipino 2040: A Long-term Vision Exercise Thematic Areas: Infrastructure Development and Urbanization Health Care Science, Technology and Innovation Education and Training Environment, disaster risk management and climate change Energy Demographic Dividend Governance and Institutions Financing Development

13 Process Flow of the PDP Midterm Update Issuance of: - Memorandum Circular - Planning Guidelines Meetings: - Inter-agency - Sub-committees - Planning Committees - Inter-Planning Committees Regional Consultations Chapter Write-up Presentation to NEDA Board President s endorsement LEDAC Published PDP Midterm Updates

14 -End- Thank you!