status of phi economy

8/3/2019 Status of Phi Economy

1/42

Asian Development Bank

The Status of the Philippine Economyby

Gnter HeckerJanuary, 2001


2/42

Asian Development Bank

The Status of the Philippine Economyby

Gnter HeckerDecember, 2000


3/42


4/42


5/42

What you hear about the Philippines

in th

e news lately Corruption and cronyism are at a high point

Governance low

Administration not functioning

Budget in disarray, therefore

IMF has walked out on the Philippines, therefore..

Investors confidence going towards the zero-point

Peso at all time low

Stock market at rock-bottom Economy in shambles

Project implementation takes twice as long as it should


6/42

GDP Growth (%)

least affected by the crisis, but moderate recovery

-20.00

-15.00

-10.00

-5.00

0.00

5.00

10.00

15.00

1996

1997

1998

1999

2000est

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

00Q4

Philippines Indonesia Korea Malaysia Thailand


7/42

Inflation Rate (%)

.stayed in manageable levels

0

5

10

15

1996

1997

1998

1999

2000

e

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

00Q4



8/42

Current Account Balance as % ofGDP

has been increasing since the crisis to second place

-10

-5

0

5

10

15

20

1

996

1

998

20

00e

98Q1

98Q3

99Q1

99Q3

00Q1

00Q3



9/42

Exports of

Goods and Services Growth (%)

.exports are growing, while.

-50

-40-30

-20

-10

0

10

20

30

40

50

1996

1997

1998

1999

2000e

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

00Q4



10/42

Imports ofGoods and ServicesGrowth (%)

imports are contracting

-50

-40

-30

-20

-10

0

1020

30

40

50

1996

1997

1998

1999

2000e

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

00Q4



11/42

Exchange Rate Index(weekly average, last week of June 1997 = 100, $/local currency)

..rates moved together with the other comparator currencies

01020304050

60708090

100

Jun-97

Oct-97

Feb-98

Jun-98

Oct-98

Feb-99

Jun-99

Oct-99

Feb-00

Jun-00

Oct-00

Indonesia Rep of Korea Malaysia Philippines Thailand

J2K

Effect


12/42

Pe

sosvis--visE

uro

80

85

90

95

100

105

110

115

Jan-00

Feb-00

Mar-00

Apr-00

May-00

Jun-00

Jul-00

Aug-00

Sep-00

Oct-00

Nov-00

Dec-00JEf


13/42

Composite Stock Price Index(weekly average, last week of June 1997=100)

20

40

60

80

100

120

140

160

180

Jun-97

Aug-97

Oct-9

7

Dec-97

Feb-

98

Apr-98

Jun-98

Aug-98

Oct-9

8

Dec-98

Feb-

99

Apr-99

Jun-99

Aug-99

Oct-9

9

Dec-99

Feb-

00

Apr-00

Jun-00

Aug-00

Oct-0

0

Dec-00

Indonesia Rep of Korea Malaysia Philippines Thailand

J2k

Effect

EDSA2Effect


14/42

NPL ofCommercial Banks

..low but sligh

tly increasing

0.00% 20.00% 40.00% 60.00%

Indonesia

Korea

Malaysia

Thailand

Philippines

Latest estimateavailable

Dec-99

Peak level since the

crisis


15/42

Gross Int'l Reserves (GIR) Less Gold

vs. Short-term Debts

(US$ million)Philippines

5,000

6,000

7,0008,000

9,000

10,00011,000

12,00013,000

14,000

15,000

1996

1998

2000YTD

98Q1

98Q3

99Q1

99Q3

00Q1

00Q3

GIR Shorterm Debts


16/42

GDP per Capita Development.Philippines is second to reach thee pre-crisis GDP/cap level

8085

90

95

100

105

110

115

120

1996 1997 1998 1999 2000



17/42

Central Government Fiscal

Balance as % ofGDP..in manageable deficit (however not meeting target figures), but

-15

-10

-5

0

5

1996

1997

1998

1999

2000

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

00Q4



18/42

External Debt as % ofGDP

debt level is second highest of Region

0

20

40

60

80

100

120

140

160

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000



19/42

Government Debt Situation

0

200

400

600

800

1000

1200

1996 1997 1998 1999 2000YTD

0.00%

10.00%

20.00%

30.00%

40.00%

Foreign Debt Domestic Debt Debt Svc. In % of Budget Expend.


20/42

Tax Revenue in % ofGNP(1991-2000 Average)

.amongst lowest in Region

0 10 20 30

Philippines

Thailand

Malaysia

Korea

Indonesia


21/42

Tax Revenue in % ofGNP

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04

GoP Plan


22/42

RevenuesWaived due to Tax Incentivesin billion Pesos

high portion of special exemptions since 1997

3.5 4.72 4.08 3.84

19.22

37.7228.65

14.96

26.9619.4

16.4

20.63

12.87

15.11

0

10

20

30

40

50

60

1993 1994 1995 1996 1997 1998 1999

Import TaxExcemptions Others


23/42

Budget Support to Gov.ownedCorporationsin billion Pesos (1999)

0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00

1999

Others

Nat.Tobacco Adm.

PNR

NFA

Nat.Elec.Adm.

Nat.HomeMorg.Fin.Corp.

NHA


24/42

Foreign Direct Investmentin $ million

.FDIs are dwindling

-$4,000

-$2,000

$0

$2,000

$4,000

$6,000

$8,000

1995 1996 1997 1998 1999 2000



25/42

Real Gross Domestic Investment

Growthworrying level of investment

-60

-40

-20

0

20

40

1996

1997

1998

1999

2000YTD

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

00Q4



26/42

Major Constraints for

Philippine Economy LacklusterGrowth

High Population Growth

High Unemployment

Asset Ownership Distribution

Savings Ratio

Governance

Low Performance ofAgriculture Sector


27/42

Long

-termGNPGrowt

-1

0

-

8

-

6

-

4

-

2 0 2 4 6 8

1

0

1965

1967

1969

1971

1973

1975

1977

1979

19811983

1985

1987

1989

1991

1993

MarcosEra

Post-

Marco

sEra


28/42

PopulationGrowthstill has the second largest growth

0.00

0.50

1.00

1.50

2.00

2.50

3.00

Indonesia Korea Malaysia Thailand Philippines

80's 90's


29/42

Annual Rate of Poverty Reduction1985-95

-10.0% -8.0% -6.0% -4.0% -2.0% 0.0%

East Asia

Thailand

Malaysia

Korea

Indonesia

Philippines


30/42

Unemployment Rate (%).highest in Region

0

2

4

6

8

10

12

14

199

6

199

7

199

8

199

9

98Q

1

98Q

2

98Q

3

98Q

4

99Q

1

99Q

2

99Q

3

99Q

4

00Q

1

00Q

2

00Q

3

00Q

4

Indonesia Korea Malaysia Thailand Philippines


31/42

Savings Ratio in the 1990s.Philippines is lowest

0% 10% 20% 30% 40% 50%

Savings Ratio

Singapore

Philippines

Thailand

Malaysia

Korea

Indonesia


32/42

Saving Ratio vs.GNP Growth.growth seems to determine savings ratio

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

1982

1984

1986

1988

1990

1992

1994

1996

1998

-10.00%-8.00%

-6.00%

-4.00%-2.00%

0.00%2.00%

4.00%6.00%

8.00%10.00%

National Savings Ratio GNP Growth


33/42

Corporate Ownership

Distribution in % of Total

0% 20% 40% 60% 80%

15 richest

Families

Philippines

Thailand

Malaysia

Korea

Indonesia


34/42

Governance Indicators

0

5

10Rule of Law

Efficiency of

Judicial SystemCorruption

Malaysia

Korea

ThailandIndonesia

Philippines


35/42

Performance of Philippine

Agricultural Sectorin % of best practice in terms of yields per hectar

0

50

100ce

Corn

CopraSugar

Banana

Philippines

Best practice


36/42

GNP vs Agri Sector Growth

-10

-8

-6

-4

-2

0

2

4

6

8

10

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

Real GNP Growth Growth Rate Agri Sector


37/42

Sources of ODA Loans

JBIC

53%

Worldbank

20%

ADB

22%

Others

5%

Total: $ 12.9 B

As of Dec 2000


38/42

Status of ODA Loansas of Dec 2000

very unsatisfactory Portfolio performance

1.6

5.3

1.2

1.3

1.09

1.7

0.30.3

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

JBIC WB ADB Others

Disbursed Undisbursed

Total $ 12.9b


39/42

Scenario for the Philippines

Fiscal deficit will be difficult to close

Politically difficult to increase taxes

Export may suffer to due slowdown of USeconomy

Agriculture.next El Nio in sight

Direct foreign investmentcompetitionby other countries increasing


40/42

10 Areas of special Attention..

1. Improve investors confidence

2. Accelerate sector reforms

3. Achieve fiscal consolidation

4. Broaden liberalization of economy

5. Conserve remarkable export performance

6. Exploit competitive advantages

7. Enhance competitiveness8. Increase investment in rural areas

9. Increase savings rate

10. Improve implementation of ongoing investment


41/42

Tel: 638-1002 Web: www.adb.org

ADB-HQ, 1st Floor East Zone


42/42

Thank you very much

status of phi economy

Documents