The Broad Strokesof the Philippine Economy and the

Cebu-Central Visayas Region

Perry FajardoFifth Annual Economic Briefing and Investment Forum

City Sports Club of Cebu, Cebu Business Park

Cebu City, Philippines 6000

September 18, 2015

Presentation Outline

• The National Economy• The long past

• The last five years

• The last two quarters

• Cebu and the Central Visayas Region

• Global Outlook

• Philippine Outlook

• Conclusion

The National Economy

Failure of policy to shift from earlysuccess in import substitution into export

industrialization and poor governance in general , characterized by high level of corruption from the top down to the local level, constrained the country from sustaining its rapid economic growth and advantage

over its neighbors that it enjoyed in the firstdecade and a half after the last war.

6.3

7.6

10.8

6.2

8.9

7.56.97.0

5.4

3.5

6.8

1.4

5.64.8

7.1

3.4

5.34.4

5.34.94.7

3.8

5.45.4

8.9

3.6

5.6

8.8

5.65.2

5.65.1

3.43.6

1.9

-7.3 -7.3

3.4

4.3

6.86.2

3.0

-0.6

0.3

2.1

4.44.7

5.85.2

-0.6

3.1

4.4

2.93.6

5.0

6.7

4.85.2

6.6

4.2

1.1

7.6

3.7

6.77.1

6.1

-10.0

-8.0

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0 Philippine Annual GDP Growth (In%)1949-2014 (Based on NSCB data)

Annual Economic (GDP) Growth(Under 6 Philippine Presidents)

Marcos 1 Marcos 2 C. Aquino F. Ramos J. Estrada G. Arroyo B. Aquino III

1965 5.3 1976 8.8 1986 3.4 1992 0.3 1998 -0.6 2001 1.8 2010 7.6

1966 4.4 1977 5.6 1987 4.3 1993 2.1 1999 3.4 2002 4.4 2011 3.7

1967 5.3 1978 5.2 1988 6.8 1994 4.4 2000 6.0 2003 4.9 2012 6.8

1968 4.9 1979 5.6 1989 6.2 1995 4.7 2004 6.4 2013 7.2

1969 4.7 1980 5.1 1990 3.0 1996 5.9 2005 5.0 2014 6.1

1970 3.8 1981 3.4 1991 -0.6 1997 5.2 2006 5.4 2015

1971 5.4 1982 3.6 1992 0.3 1998 -0.6 2007 7.2 2016

1972 5.4 1983 1.9 2008 4.6

1973 8.9 1984 -7.3 2009 1.1

1974 3.6 1985 -7.3 2010 7.6

1975 5.6

Ave. 5.2 Ave. 2.5 Ave. 3.3 Ave. 3.1 Ave. 2.9 Ave. 4.8 Ave. 6.3

Philippine 2014 Global Ranking

• Many decades of sluggish economic growth, coupled with relatively faster population growth put the country behind its neighbor which did better in both counts.

Population, GDP and GDP Per Capita, and GDP Per Capita Ratio, 2014

Country Population

(In 000)

Nominal GDP

(In M US$)

GDP (PPP) Per

Capita (In US$)

Nominal GDP Per

Capita (In US$)

GDP Per Capita

Ratio (RP=1.00)

1. China 1,372,100 10,380,380 (2) 12,880 (89) 7,589 (79) 2.65

2. India 1,277,190 2,049,501 (9) 5,855 (125) 1,627 (143) 0.57

3. US 321,833 17,418,925 (1) 54,597 (10) 54,597 (10) 19.1

4. Indonesia 255,462 888,648 (16) 10,641 (102) 3,534 (118) 1.23

10. Japan 126,865 4,616,335 (03) 37,390 (28) 36,332 (26) 12.70

12. Philippines 102,058 284,927 (39) 6,962 (119) 2,865 (129) 1.00

14. Vietnam 91,583 186,049 (55) 5,635 (126) 2,053 (134) 0.72

21. Thailand 65,104 373,804 (32) 14,354 (81) 5,445 (95) 1.90

27. South Korea 51,465 1,416,949 (13) 35,277 (30) 28,101 (30) 9.81

43. Malaysia 30,707 326,933 (35) 24,654 (50) 10,804 (64) 3.77

102. Hong Kong 7,299 289,628 54,722 39,871 13.92

114. Singapore 5,470 308,051 (36) 82,762 (3) 56,319 (9) 19.66

Failure to industrializecondemned the Filipino workers to engaged in low

paying activities in agriculture in the rural areas and services in the urban areas or to

work/migrate abroad.

GDP by Sector in Percent, 1960-2013

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

19

60

19

62

19

64

19

66

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

12

20

14

Agriculture Industry Services

Employment by Sector in Percent, 1980-2012

0

10

20

30

40

50

60

19

80

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

Agriculture Industry Services

Industry has higher per capita output thanthe rest of the economy

SectorPercent Share of

Output 2012

Percent Share of Employment

2012

ProductivityIndex 2012

Agriculture 11.8 32.2 0.37

Industry 31.2 15.4 2.03

Services 56.9 51.4 1.11

Total 100.00 100.00 1.00

Not a miracle yetbut the Philippine economy surged in the last five years under the “Daang Matuwid” banner of the

Aquino government

GROWTH RATES IN GROSS DOMESTIC PRODUCT BY INDUSTRY AND TYPE OF EXPENDITURE2009 – 2014 (AT CONSTANT 2000 PRICES)

Now led by industry from the production side

ANNUAL GROWTH RATES

BY INDUSTRY ORIGIN 2009-10 2010-11 2011-12 2012-13 2013-14Average

2010-14

1. AGRICULTURE -0.2 2.6 2.8 1.1 1.6 1.58

2. INDUSTRY SECTOR 11.6 1.9 7.3 9.2 7.9 7.58

a. Mining & Quarrying 11.4 7 2.2 1.2 4.9 7.13

b. Manufacturing 11.2 4.7 5.4 10.3 8.3 5.85

c. Construction 14.3 -9.6 18.2 10.3 9.9 8.32

d. Electricity, Gas and Water

Supply9.9 0.6 5.3 3.6 2.8 3.55

3. SERVICE SECTOR 7.2 4.9 7.1 7.0 5.9 6.42

GROSS DOMESTIC PRODUCT 7.6 3.7 6.7 7.1 6.1 6.24

GROWTH RATES IN GROSS DOMESTIC PRODUCT BY INDUSTRY AND TYPE OF EXPENDITURE2009 – 2014 (AT CONSTANT 2000 PRICES)

Led by investment or capital formation from demand side

ANNUAL GROWTH RATES

BY TYPE OF EXPENDITURE 09-10 10-11 11-12 12-13 13-14Average

2010-14

1. Household Final Consumption

Expenditure 3.4 5.6 6.6 5.6 5.4 5.32

2. Government Final Consumption

Expenditure 4.0 2.1 15.5 5.0 1.7 5.66

3. Capital Formation 31.6 2.8 -4.3 27.7 5.4 12.64

4. Plus Exports 21.0 -2.5 8.6 -1.0 11.3 7.48

5. Less Imports 22.5 -0.6 5.6 4.4 8.7 8.12

GROSS DOMESTIC PRODUCT 7.6 3.7 6.7 7.1 6.1 6.24

INDICATORS DERIVED FROM THE NATIONAL ACCOUNTSBASE YEAR: 2000

2010 2011 2012 2013 2014

1. Labor Productivity (in pesos, constant)

Total 158,182 158,914 167,596 178,023 187,988

Growth Rate 4.7 0.5 5.5 6.2 5.6

Labor Productivity Total (GVA/total number

of hours worked, in pesos, constant)* 72.8 74.3 78.7 78.2 84.7

2. Fixed Capital Formation/GDP (in %, current) 20.5 18.7 19.6 20.5 20.8

3. Total Exports (in million, current)

US $ (FOB) 69,485 71,801 77,057 76,697 81,667

Share to GDP (in percent) 34.8 32.0 30.8 28.0 28.7

4. Total Imports (in million, current)

US $ (CIF) 73,167 79,948 85,266 88,050 92,295

Share to GDP (in percent) 36.6 35.7 34.1 32.2 32.4

(Exports-Imports)/GDP (in percent, current) -1.8 -3.6 -3.3 -4.2 -3.7

(Exports+Imports)/GDP (in percent, current) 71.4 67.7 64.9 60.2 61.1

5. National Government Debt Service (in M PhP) 689,799 722,750 729,774 758,160 532,838

Debt Service/GDP 7.7 7.4 6.9 6.6 4.2

Latest Economic Performance: First half 2015

• For the first semester of 2015, GDP grew by 5.3 percent from 6.2 percent in the previous period. GDP grew year-on-year by 5.6 percent in the second quarter of 2015.

• In production, the second quarter growth was driven by the Services sector with the positive growth exhibited by Trade, Other Services Real Estate, Renting & Business Activities, and supported by the growth of Manufacturing and Construction.

• In demand, growth was led by capital formation or investment.

GROSS DOMESTIC PRODUCT BY INDUSTRY:2nd Quarter 2014 and 2nd Quarter 2015

AT CONSTANT 2000 PRICES, IN MILLION PESOS

INDUSTRY/INDUSTRY GROUP Q2 2014 Q2 2015Growth Rate

(%)

Agriculture 167,048 166,133 -0.5

Industry 614,797 652,594 6.1

Services 1,050,348 1,115,233 6.2

GROSS DOMESTIC PRODUCT 1,832,193 1,933,961 5.6

Net Primary Income 364,294 372,332

GROSS NATIONAL INCOME 2,196,487 2,306,293 5

GROSS DOMESTIC PRODUCT BY TYPE OF EXPENDITURE:2nd Quarter 2014 and 2nd Quarter 2015

AT CONSTANT 2000 PRICES, IN MILLION PESOS

TYPE OF EXPENDITURE Q2 2014 Q2 2015Growth Rate

(%)

1. Household Final Consumption Expenditure 1,213,137 1,288,074 6.2

2. Government Final Consumption Expenditure 216,265 224,704 3.9

3. Capital Formation 330,285 387,755 17.4

4. Exports 887,453 920,041 3.7

A. Exports of Goods 714,658 693,545 -3.0

B. Exports of Services 172,795 226,496 31.1

5. Less : Imports 803,283 905,027 12.7

A. Imports of Goods 652,546 714,579 9.5

B. Imports of Services 150,737 190,448 26.3

6. Statistical Discrepancy -11,663 18,414

GROSS DOMESTIC PRODUCT 1,832,193 1,933,961 5.6

Cebu and Central Visayas

With 5,000 sq. km. in land area,Cebu is 4.8 times bigger than Hong Kong and

7.4 times bigger than Singapore.Like the two city states,

Cebu is also strategically located.It has a good seaport and airport.

A new airport terminal is under construction and a new container port is planned to be

constructed soon.

Cebu too is not far behind Singapore and Hong Kong in population.

Growing at 2.2% annually,Cebu’s population is estimated at 4.5 million this year

and will reach 5.2 million by 2020.In 2014, the population of

Singapore was placed at 5.52 million andHong Kong, 7.26 million.

Land Area, Population and Annual Growth Rate

City/Municipality

Total Land Area(Surface Area

in Sq. Km.)

Total PopulationAnnual Growth

Rate (In %)Estimated Population

May 1, 2010 2000-2010 2015

Metro Cebu 1,053.2 2,551,009 2.83 2,932,993

1. Lapu-Lapu City 60.3 350,467 4.91 445,381

2. Mandaue City 28.9 331,320 2.46 374,127

3. Cebu City 300.5 866,171 1.88 950,711

4. Other 10 LGUs 663.5 1,003,051 3.18 1,173,007

Rest of Cebu 4,019.1 1,616,311 1.25 1,719,887

Total Cebu 5.072.3 4,167,320 2.19 4,644,070

Region VII 6,800,180 1.77 7,294,567

Metro Manila 11,855,975 1.78 12,949,396

Philippines 300,000.0 92,337,852 1.9 101,449,681

Unlike the rest of the Philippines,up to 80% of the workers in Cebu and more than 90% in Metro Cebu are already employed in industry and service activities, away from agriculture which in the

country still engaged a third of the workforce.

Employment Structure, 2010(Percent distribution of gainful workers 5 years old and over by major

kind of business or industry)

Business Activity/IndustryMetro

CebuCebu Region 7 NCR PHIL

Total 100.00 100.00 100.00 100.00 100.00

Agriculture 7.23 20.62 32.13 0.55 32.02

Industry 29.11 25.51 19.87 18.73 15.91

Mining & Quarrying 0.40 0.50 0.39 0.37 0.57

Manufacturing 17.48 13.75 9.90 8.39 6.97

Electricity, Gas & Water 0.56 0.49 0.44 0.47 0.36

Construction 10.68 10.79 9.14 9.51 8.02

Services 63.20 53.51 47.64 77.84 50.90

Not Reported 0.45 0.36 0.36 2.88 1.17

While the Philippines is now closingin on China in GDP growth, Cebu today is even doing

much better.With Cebu, the GDP of the Central Visayas Region

grew in average by 9.0% in the last five years. This was 1.4 times faster than the whole country and fastest

among 17 regions.

GRDP Growth Rates, 2010 to 2014 (at constant 2000 prices)REGION / YEAR 2009-10 2010-11 2011-12 2012-13 2013-14

Average2010-14

Growth Elasticity

PHILIPPINES 7.6 3.6 6.8 7.1 6.1 6.2 1.00NCR METRO MANILA 7.6 3.1 7.0 9.2 5.9 6.6 1.05CAR CORDILLERA 6.3 1.3 1.0 5.4 3.2 3.4 0.55I ILOCOS 7.1 2.4 5.2 6.8 5.7 5.4 0.87II CAGAYAN VALLEY (1.1) 5.6 8.1 6.2 6.4 5.0 0.81III CENTRAL LUZON 10.7 7.1 6.5 4.4 9.0 7.5 1.21IVA CALABARZON 11.1 1.7 7.3 6.7 5.1 6.4 1.02IVB MIMAROPA 1.1 3.1 4.8 1.3 6.5 3.4 0.54V BICOL 5.2 1.9 6.9 8.1 4.2 5.3 0.84VI WESTERN VISAYAS 3.7 6.2 7.7 3.4 4.9 5.2 0.83VII CENTRAL VISAYAS 12.5 6.8 9.4 7.4 8.8 9.0 1.44VIII EASTERN VISAYAS 2.0 2.1 (6.4) 4.5 (2.3) 0.0 0.00IX ZAMBO PENINSULA 3.6 0.1 12.9 4.1 6.5 5.4 0.87X NORTHMINDANAO 6.9 5.8 7.2 5.3 7.2 6.5 1.04XI DAVAO REGION 5.0 3.7 7.4 6.7 9.4 6.4 1.03XII SOCCSKSARGEN 2.0 5.3 8.0 8.4 6.4 6.0 0.96XIII CARAGA 7.4 8.5 10.7 8.1 7.8 8.5 1.36ARMM MUSLIM MINDANAO 2.3 (0.3) 1.1 3.8 3.0 2.0 0.32

From only 6.0% of the country in 2010,the Central Visayas GRDP has increased to 6.5% in

2014, the fourth biggest after Metro Manila, Calabarzon, and Central Luzon.

Basing on population alone, Cebu contributesup to 2/3 of the CV GRDP which is more actually if we

consider that Cebu has relatively more workers in highly productive industrial activities and high level

service activities than the rest of the region.

Gross Regional Domestic Product, 2010 to 2014Percent Share by Region, in Percent (at constant 2000 prices)

REGION / YEAR 2010 2011 2012 2013 2014PHILIPPINES 100.0 100.0 100.0 100.0 100.0

NCR METRO MANILA 35.7 35.6 35.7 36.4 36.3 CAR CORDILLERA 2.1 2.1 1.9 1.8 1.8 I ILOCOS 3.2 3.1 3.1 3.1 3.1 II CAGAYAN VALLEY 1.8 1.8 1.8 1.8 1.8 III CENTRAL LUZON 9.0 9.3 9.3 9.1 9.3 IVA CALABARZON 17.7 17.4 17.4 17.3 17.2 IVB MIMAROPA 1.8 1.8 1.7 1.6 1.6 V BICOL 2.0 2.0 2.0 2.0 2.0 VI WESTERN VISAYAS 4.0 4.1 4.1 4.0 3.9 VII CENTRAL VISAYAS 6.0 6.2 6.3 6.3 6.5 VIII EASTERN VISAYAS 2.6 2.6 2.3 2.2 2.0 IX ZAMBO PENINSULA 2.1 2.0 2.1 2.0 2.0 X NORTH MINDANAO 3.7 3.8 3.8 3.7 3.7 XI DAVAO REGION 3.8 3.8 3.8 3.8 3.9 XII SOCCSKSARGEN 2.7 2.7 2.7 2.7 2.8 XIII CARAGA 1.1 1.2 1.2 1.3 1.3

ARMM MUSLIM MINDANAO 0.8 0.8 0.8 0.7 0.7

Central Visayas, and Cebu for that matter,is now fast modernizing with its industry growing at

13.4% in the last five years consistent with the experience of Asia’s NICs when

they were still emerging.

Central Visayas Gross Regional Domestic ProductAnnual Growth Rate, 2010-2014

INDUSTRY/YEAR 2009-10 2010-11 2011-12 2012-13 2013-14Average2010-14

I. AGRICULTURE 0.9 3.7 -0.6 0.3 (2.6) 0.34

II INDUSTRY SECTOR 22.1 9.3 12.0 9.5 13.9 13.36

a. Mining & Quarrying 30.8 13.0 6.5 (1.7) 20.2 13.76

b. Manufacturing 28.2 7.9 6.3 14.0 10.0 13.28

c. Construction 10.6 13.8 27.5 2.2 24.7 15.76d. Electricity, Gas and

Water Supply9.2

4.6 7.8 3.8 1.4 5.36

III SERVICE SECTOR 8.8 5.7 9.1 6.9 6.6 7.42

GROSS DOMESTIC PRODUCT 12.5 6.8 9.4 7.4 8.8 8.98

Nearing PhP1.0 trillion (at current prices),the Central Visayas GRDP, about a third of which is from Cebu, are now derived less from agriculture

(6.0%) and more from industry (39.0%), and services (55%) which is in line with the output structure of Asia’s NICs. Nationally, the proportion is 10.0% in agriculture and 33.0% and 57.0%, respectively, in

industry and services.

Gross Regional Domestic Product, Percent Distribution by Sector, 2014In thousand PhP at current and constant 2000 Prices

INDUSTRY/YEAR2014

(At Current Price)2014

(At 2000 Prices)Percent Distribution

I. AGRICULTURE 56,386,577 27,822,307 5.99

II INDUSTRY SECTOR 309,877,143 183,241,418 39.43

a. Mining and Quarrying 7,662,574 4,141,653 0.89

b. Manufacturing 178,411,071 114,612,411 24.66

c. Construction 110,292,854 56,482,444 12.15

d. Electricity, Gas and Water 13,510,643 8,004,909 1.72

III SERVICE SECTOR 465,569,555 253,682,749 54.59

GROSS DOMESTIC PRODUCT 831,833,275 464,746,474 100.00

Board of Investments (BOI) approved investments going to Central Visayas are more attracted to locate

in Cebu as shown by data on investment projects approved by the BOI which amount to PhP1.47 billion

out of PhP1.57 billion from 2010 to 2013 with 11.2 thousand jobs also being generated.

BOI APPROVED NEW INVESTMENTS IN CEBU AND REGION VII, 2010-2013

New Investment/

Employment2010 2011 2012 2013

Total

2010-13

Cebu

New Investment

($000)44,554 280,397 1,027,440 118,604 1,470,995

Employment 2,063 4,110 1,983 3,056 11,212

Region VII

New Investment

($000)45,315 280,397 1,063,653 186,565 1,575,930

Employment 2,179 4,110 2,058 3,382 11,729

Cebu has six fully operationalExport Processing/Economic Zones.

They now has a total of 278 locators with P13.8 B in investments, with 117 thousand jobs created and

$3.6B in annual export sales.

EPZA APPROVED INVESTMENTS IN CEBU

NameInvestment

(PHP mil.)

Number of

Locators

Number of

Employees

Export Sales

(In M US$)

MEZ 1 2,980 158 60,739 2.213

MEZ 2 770 54 15,620 308

CLIP 367 35 1.957 24

WCIP 8,478 20 16,662 692

MRI Ecozone 1.048 7 20,814 285

New Cebu

Township 141 4 859 27

Total 13,784 278 116,651 3,550

Business Process Outsourcing

• Cebu also host several EPZA approved IT Parks/Building.

• In 2012, four of these I.T. Park had 139 locators (BPOs) with about 95 thousand employed workers.

• Cebu is now in the top ten of the Tholons’s list of 100 Emerged Global Outsourcing Cities.

• Being in the top ten means that Cebu is now meets the stringent requirements BPO investors in IT infrastructure and connectivity, social services, manpower pool, cost of operation, government regulation and commercial risk.

• The Cebu City IT-BPO roadmap aims to generate U.S. 2.4 billion in total revenues and around 150,000 employees by 2017.

• The challenge for Cebu is to get at least 20% of the national BPO and KPO market.

Cebu is also a favoritetourism destination in the Philippines.

Total tourist arrival grew by 11.1 % annually from1.25 million in 2006 to 2.6 million in 2013 with foreign

visitors rising much faster at 13.5% annuallyin the same period.

Total tourist arrival, both domesticand foreign, again went up by 16.4 percent

to 3.0 million in 2014.

Tourist Arrival

474,720602,002 649,599 625,098

708,400833,441

997,303

1,152,821

772,767890,264

946,639993,172

1,059,8341,088,797

1,222,035

1,439,247

1,247,487

1,492,266

1,596,2381,618,270

1,768,2341,922,238

2,230,323

2,598,250

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

2006 2007 2008 2009 2010 2011 2012 2013

Foreign Domestic Total

AGR 2006-2013 (%)Foreign = 13.5Domestic = 9.3Total = 11.1

Total foreign trade in Cebureached $8.84 B in 2014 with exports

valued at $5.36 B and imports at $3.48 with a favorable trade balance of $1.88 B.

Up to 90% of Region VII Export is from Cebu

Indicator

Value of Exports and Imports(FOB in Million US Dollars)

Percent Increase/ (Decrease)

2012 2013 2014 2012-2013 2013-2014

TOTALExportsImports

BALANCE OF TRADE

7,085.94,334.32,751.6

1,582.7

6,534.13,877.22,656.9

1,220.3

8,844.65,364.63,480.0

(7.8)(10.5)(3.4)

35.438.431.0

No doubt, the Philippines is nowemerging new NIC in Asia with GDP growth second

only to the slowing China with Cebu and Central Visayas playing a major role.

Global Outlook

• Global GDP forecasts anticipate gradual strengthening in 2015 and 2016.

• Global GDP forecasts by leading organizations range between 2.8% and 3.8% for 2015, with slightly better growth rates in 2016.

- McKinsey: The Outlook for Global Growth in 2015

• Indicators show steadiest improvement in developed economies.

• Advanced economies continued to improve in January, while Brazil and Russia weakened.

- McKinsey: The Outlook for Global Growth in 2015

IMF WEO, July 2015 UpdateReal GDP Actual Projection

2013 2014 2015 2016

World 3.4 3.4 3.3/3.5 3.8/3.7

Advanced Economies 1.4 1.8 2.1 2.4

United States 2.2 2.4 2.5 3.0

Euro area -0.4 0.8 1.5 1.7

Japan 1.6 -0.1 0.8 1.2

Emerging Market Developing

Economies5.0 4.6 4.2 4.7

Emerging Developing Asia 7.0 6.8 6.6 6.4

China 7.7 7.4 6.8 6.3

India 6.9 7.3 7.5 7.5

Asian 5 5.1 4.6 4.7 5.1

Philippines 7.2 6.1 6.7 6.3

Latest IMF GDP Forecast (for Oct. 2015 update)Real GDP

2014 2015 2016

World 3.3 3.0/3.3 3.6/3.8

United States 2.4 2.4 2.6

Euro area 0.9 1.6 1.9

Japan -0.1 0.6 1.2

Germany 1.6 1.6 2.0

France 0.2 1.0 1.4

Italy -0.4 0.7 1.3

United Kingdom 3.0 2.4 2.3

Canada 2.4 1.1 2.1

China 7.4 6.7 6.5

India 7.2 7.2 7.3

Brazil 0.2 -2.8 -0.7

Rest of the world 2.8 2.3 3.3

Philippine Outlook

Despite the inability of the global economyto return to its pre-Great Recession growth path, the

Philippine economy still managed to grow at twice the global rate and at its more rapid rate than in the past.

Can we still sustain this in the next five years?The answer depends on the headwind that are

brewing up globally and locally andhow we respond to them.

Global headwinds

• The uneven global growth among regions and among countries within regions and the divergent economic policies applied by the different countries of the world that run counter to each other (Quantitative easing, Yuan devaluation, etc.) • The steep decline in the price of oil and commodities which

while beneficial to importing countries are destructive to the producers.•Geopolitical reasons to include not only the events in the

Middle East with the rise of the ISIS but also the boiling water of the South and East China Sea.

Local headwinds:

•Weak infrastructure that may dampen the enthusiasm of investors to bet on the gains that the present administration has so far achieved in the field of doing business and other measures of good governance.• Failure of the government to do its part in spending its

budget on time which is show to have contributed to the growth slowdown last year and this year, including failing to use the ODA on time.• The forthcoming election which may again change our

priorities and the way we tackle our national development priorities.

Can we overcome this headwinds?

• Part of the answer is in the next election. What kind of leaders are we going to elect? Are they up to the challenges that are facing today and in the future?

• Another answer lies on the strength of the financial market since much of the disturbance coming from outside or inside are first translated and felt in our finance sector. How resilient and strong are our banks to resist the volatility in the market?

• But the final answer depends so much on how we respond to these challenges and how good we are at taking advantage of the many opportunities that are now opened with the ASEAN Economic Integration and those that are still to come with the APEC.

Conclusion

?

Thank you.