THE PHILIPPINE ECONOMY:

Recent Performance and

Long-Term Outlook

Undersecretary Rolando G. Tungpalan

17 February 2016

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1960 1962 1964 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

GDP in 2000 prices, trillion Php, 1960-2018

The Philippines has been on a higher growth trajectory since the beginning of the current decade.

Real GDP growth

6.2% (2010-2015)

5.8% (2015) 6.1% (2014) 7.1% (2013)

Source: PSA

Structural break of potential real GDP at around 2009

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Favorable Macroeconomic Trends

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6.0

7.0

1990-1999 2000-2009 2010-2015

Agriculture Industry Services

Supply Side

-2.0

-1.0

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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 takes place

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.

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2000-2009 2010-2015

Manufacturing contribution to Growth

The economy is now on a higher growth trajectory with increasing

contribution from the manufacturing sector

Structural transformation takes place

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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

306.9 346.2

595.8

766.5 876.6

1018.7

2.7 2.7

4.3

5.0 5.2 5.4

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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)

Sound Government Finances

35.7%

17.4 % 9.3%

10.5%

12.7%

14.4%

2012

36.4%

17.3% 9.1%

10.4%

12.5%

14.3%

2013

36.3%

17.2% 9.3 %

10.3%

12.4%

14.4%

2014

Gross Regional Domestic Product, 2012 to 2014 (at constant 2000 prices)

• Low poverty incidence • Large segment is above

poverty line and vulnerable to slipping back to poverty

• Widening demand-supply gap in urban infrastructure services

• Housing problems • Traffic congestion

Impact of

Urbanization

to the

Economy Pressure on Urban

Infrastructure

Despite lower poverty incidence in urban areas, urban poor remains

vulnerable

City-driven economic growth

Proliferation of urban settlements

• 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

• 326 cities and urban municipalities

• Exposure to risks associated with climate change due to being near or along the coast

• Rising informal settlements

Projected Population for Selected Age Groups, Philippines: 2010-2045

AGE/SEX

2010 2015 2020 2025

Number (in millions)

Number (in millions)

Number (in millions)

Number (in millions)

Total Population

93.14 101.56 109.95 117.96

0-4 10.77 11.33 11.48 11.36

0-14 31.34 32.28 33.31 33.91

15-64 57.77 64.41 70.57 76.38

60 and over 6.26 7.64 9.51 11.72

65 and over 4.02 4.87 6.06 7.67

Female 15-49 23.97 26.27 28.27 30.25

Source: PSA

AGE/SEX

2030 2035 2040 2045

Number (in millions)

Number (in millions)

Number (in millions)

Number (in millions)

Total Population

125.34 131.90 137.53 142.09

0-4 11.04 10.62 10.12 9.52

0-14 33.63 32.78 31.53 30.01

15-64 82.15 87.43 92.14 95.87

60 and over 14.25 16.83 19.65 22.60

65 and over 9.56 11.70 13.86 16.22

Female 15-49 32.14 33.78 34.93 35.34

Projected Population for Selected Age Groups, Philippines: 2010-2045

Indicators Actual Annual Plan Target

2014 2015 2015 2016

Poverty Incidence 25.8a/ n.a. 20.0-23.0 18.0-20.0

Unemployment rate (in %) 6.6b/ 6.3c/ 6.6-6.8 6.5-6.7

Employment generated (in ‘000) 1,253b/ 183c/ 753-814 650-750

Underemployment rate (%) 18.4b/ 18.5c/ 18.0 17.0

GDP Growth Rate 6.1 5.8 7.0-8.0 7.0-8.0

Agriculture 1.6 0.2 2.0-3.0 2.5-3.5

Industry 7.9 6.0 8.6-9.7 9.3-10.3

Services 5.9 6.7 6.8-7.8 7.2-8.1 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

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.

• 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

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How do we keep the momentum in 2015 and beyond?

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

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

Process Flow of the PDP Midterm Update

-End-

Thank you!