Transport Industry Directions 2016:

Philippine Macroeconomic Performance and Outlook

Emmanuel F. Esguerra
Secretary of Socio-Economic Policy and Planning
National Economic and Development Authority

08 March 2016

I. Economic Performance and achievements

Average growth in 2010-2015 is the highest 6-year

average growth since the mid-1970s.
in %
8.0
7.0
6.0
5.0

Real GDP growth (6-year moving average)

19711976;
19721977;
19731978

20102015

4.0
3.0
2.0
1.0
0.0
-1.0
6-yr moving average

6.2% 2010-2015 ave

Source: NEDA Staff calculations
3

Investment
and
industry
are
increasingly
becoming major drivers of GDP growth.
Demand Side

Supply Side
7.0

8.0
7.0
6.0

6.2
%

Ave.
growth

3.0

4.5
%

2.8
%

4.5
%

4.0
3.0

2.0

2.8
%

2.0

1.0
0.0

1.0

-1.0
-2.0

6.0
5.0

5.0
4.0

6.2
%

0.0
1990-1999

2000-2009

Net exports
Government

2010-2015

Investment
Consumption

1990-1999 2000-2009 2010-2015

Agriculture
Services

Industry

The economy is now on a higher growth trajectory with increasing

contribution from the manufacturing sector
Manufacturing contribution to Growth
1.6
1.4
1.2
1
0.8

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

0.6
0.4
0.2
0
2000-2009

2010-2015

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.

Recent performance indicates that the economys

momentum remains intact
Growth of GDP by Component (%)
Fourth Quarter

FY

2014

2015

2014

2015

4.2
9.1
7.7
5.6

-0.3
6.8
6.6
7.4

1.6
7.9
8.3
5.9

0.2
6.0
5.7
6.7

Capital Formation

5.0
9.4
3.0

6.4
17.4
13.5

5.4
1.7
5.4

6.2
9.4
13.6

o.w. Fixed capital

formation
Exports
Imports

8.0
12.8
9.9

22.5
7.1
13.3

6.8
11.3
8.7

14.0
5.5
11.9

6.6

6.3

6.1

5.8

Supply side
Agriculture
Industry
o.w. Manufacturing
Services
Demand side
Private consumption
Government consumption

GROSS DOMESTIC
PRODUCT

Source: Philippine Statistics Authority (PSA)

Our vibrant economy is producing

more and
better
Employment
Generated
2010-2015
(000)
Unemployment and Underemployment
jobs...
rates (%)

Unemployment Rate

Employment Generated ('000)

Unem ploym ent (%)

Underem ploym ent (%)

Notes:
a/ The FY 2014 LFS estimate is the average of April, July and Oct rounds excluding Leyte data
b/ The FY 2015 LFS estimates is the average of the Jan to Oct 2015 rounds excluding Leyte data
c/ FY 2015 employment generation estimate is the average of April, July and Oct excluding Leyte data
*1997-2005: Adoption of population projection benchmark is based on the results of the 1995 Census
**2006-current: Adoption of population projection benchmark based on the results of the 2000 Census
Source: Philippine Statistics Authority
National Economic and Development Authority

Robust External Position

30,000

Continuous remittances amidst slowdown1,800

in
deployment
25,000

Increasing Net FDI

7000

100

6000

80

1,600
1,400

20,000

1,200

60

5000

40

4000

15,000

1,000

20

3000

2000

800
10,000

Cash
Remittances
(US$ mn), LHS

-20

1000
0

2,000

-40
2010

2011

2012

2013

Net FDI (US$ million)

2014 Jan-Nov 2015

5,000

-60

600
400
200

growth (%)

Positive Current Acct. & Declin ing External Debt

140

125.1

Average Growth of FDI, 2012-2014

120
100

85.0

80
60
70.0

6.0

60.0

5.0

50.0

4.0

40.0

47.5

40
20

3.0

8.6

7.5

6.5

3.4

2.0

1.4

ID

VN

SG

IN

CH

KR

30.0
2.0

20.0
10.0

1.0

0.0

0.0

Ex ternal Debt to GDP Ratio - LHS

ource: Bangko Sentral ng Pilipinas

Current A c count to GDP Ratio - RHS

0
-20

TH

TW

PH

MY

(8.6)

Our stronger fiscal position has been recognized, garnering an

investment-grade sovereign credit rating for the first time in our history.
Fiscal side:

Modest fiscal deficit; Declining Public debt & interest

payments; Increasing reliance on domestic financing
Result: resilient fiscal position

Share of expenditures allocated to interest payments

35.0
30.0

15.00

25.0
20.0
15.0

Fiscal
Position

20.00

10.00
14.5

10.0

5.00
-

5.0
0.0

(5.00)
Fiscal Position

National gov't outstanding debt (% of GDP)

80.00
70.00

120.0

60.00
50.00

60.0

40.00

40.0

20.00
10.00

Tax Effort

National Government Borrowing Program (%)

100.0
80.0

30.00

Revenue Effort

(10.00)

16.4

6.1
27.9

35.0 34.4 34.8

83.6
65.0 65.6 65.2

39.3

25.1

93.9
72.1

60.7

74.9

20.0
0.0

0.00
Foreign

9
Domestic

15.5

84.5

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

1200

5.0

1000

5.4

5.2

4.3

800

600

2.7

2.7

400

200

306.9
2013

346.2
2014

595.8
2015

766.5
2016

Actual (2013-2014)/Program(2015)/Proposed(2016)/Projections(2017-2018)

Source: Department of Budget and Management

876.6
2017

1018.7
2018

Ratio to GDP (rhs)

10

complemented by private investments in

Status of PPP Projects (as of 16 February2016)
public infrastructure
Projects by Status

No. of
Projects

Amount
(PHP bn)

12
2

196.53
106.73

14
2
5

556.6

Projects Under Implementation

Contract Awarded
Other projects under Implementation
PPP Pipeline
Projects under Procurement
Projects for Roll-out
For Approval of Relevant Government
Bodies

66.1
101.94

Projects with Ongoing Studies

For Procurement of Consultants to
Conduct Pre-investment Studies

2
5

539.41
NA

Projects Under
Conceptualization/Development

NA

National Economic and Development Source:

Authority
PPP Center

Underpinned by stronger links between Investment

Programming and Budgeting

Update of the
Comprehensive and
Integrated
Infrastructure
Program (CIIP), at
least once a year.

Implementation of
Three Year
Infrastructure Rolling
Program (TRIP) by
July 2016

Bulk of which are slated for transportation, social,

and energy infrastructures..
Total Infrastructure
Investment by Sector (20132016 and beyond)

Top 10 Agencies with the Largest

Investment
Requirements in the CIIP
Investment
Name of
Agency

Rank

1
2
3
4
5
6
7
8
9
10

DPWH
DOTC
DOE
DOH
DepEd
OPAFSAM
BCDA
HUDCC
DILG
DA
Total

# of
Cost
Projects (in Thousand
PhP)

323
588
275
39
7
258
14
10
25
108

2,269.35
1,397.76
1,327.06
503.71
310.77
234.87
210.22
173.67
131.50
98.91

1647

6,657.83

Share of Top10 Agencies to Total 91.61% of all

Infra Investments =
CIIP projects
Source: Comprehensive & Integrated Infrastructure Program (CIIP) : PhP7 .27Tn (as of

These projects are funded mostly by the national

government

ource: Amended Finalized CIIP (as of 15 May 2015)

Multimodal Transport
The Philippine Development Plan 2011-2016
identified the need to develop and improve
logistics infrastructure by:

Providing interconnectivity in Central Luzon,

Metro Manila and CALABARZON

Developing a seamless multimodal logistics

system along Subic-Clark-Manila-Batangas
corridor

Enhancing inter-island logistics

Recent Efforts for Transport Systems Development

Program/Study

Focus Area

The Survey on Mindanao Logistics

Infrastructure Network (SMLIN)
The
Transport
Infrastructure
Roadmap for Metro Manila and Its
Surrounding Areas (Regions III and
IV-A) (Roadmap)
Department of Tourism (DOT)Department of Public Works and
Highways (DPWH) Convergence
Program (Convergence Program)
Master Plan on High Standard
Highway
(HSH)
Network
Development

Logistics Infrastructure System in

Mindanao
Infrastructure
System
to
address
congestion in Metro Manila and its
surrounding areas

Logistics Infrastructure providing road

access to/from tourist destination areas
and other transport infrastructures
such as ports and airports
Road network and routes for HSH
within the sphere of 200-km radius
from Metro Manila to meet future traffic
demand
Data
Collection
Survey
on Disaster-resilient
network of feeder
Disaster-Resilient Feeder Ports and ports to ensure a secure and smooth
Logistics Network
logistics even in time of disaster

Roadmap for Transport Infrastructure Development for Metro Manila and

Its Surrounding Areas

Status of Short- term Investment Programs

Completed Projects

Ongoing Construction/Implementation Projects

19

NEDA-Board Confirmed Projects for Immediate

Implementation/Under Procurement Stage:

10

Proposed Projects in Various Stages of Project Approval (e.g.,

at the Agency Level, by the Approving Authority, etc.):

Proposed Projects for Conduct of Feasibility Study:

Multimodal Transport Framework

ASEAN Framework Agreement on

Multimodal Transport

The agreement recognizes the need to

develop an economic and efficient
multimodal transport services to expand
trade between member states and third
countries.

Philippines Logistics Performance, by area

2012

2014

International LPI score

3.02

3.0

Customs

2.63

3.0

Infrastructure

2.8

2.6

Ease of arranging shipments

2.97

3.33

Quality of logistic services

3.14

2.93

Tracking and tracing

3.3

3.0

Timeliness

3.3

3.07

Source: World Bank Logistics Performance Index

II. Prospects and Challenges

Near-term Risks to Growth

We remain vigilant and well- positioned about the downside risks to growth

External

Domestic

Fragile growth in Japan

Slowdown in large emerging economies, particularly China
Asynchronous monetary policies in major developed economies
Geopolitical tensions in the Middle East, extended period of low oil prices
Maritime dispute in the West Philippine Sea

Natural hazards including the El Nino phenomenon

Disruptions in the peace process
Delays in infrastructure and reconstruction projects
Logistics bottlenecks
And thin power reserves (potential impact of El Nino on hydropower)

21

Near-term Expected Drivers of Growth

Supply side
Lower petroleum prices
Business Process Management (BPM) fueling growth in the real estate, renting,
and business activities sector
Construction and infrastructure development
International and domestic tourism
Wholesale and retail trade
Manufacturing resurgence

Demand side
Household consumption: remittance inflows, strong consumer confidence, low
inflation regime
Government spending: expansion of social protection programs (i.e. CCT, K-12,
Philhealth coverage, etc)
Investment: public construction, including infrastructure and reconstruction; private
construction
Exports of services: good prospects for BPM and tourism

22

How do we keep the momentum in 2016 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

Filipino 2040:
A Long-term Vision Exercise
What it is envisioned to be:
Its a long-term (25 years) vision for the Philippines.
Its a basis of unity among Filipinos.
A guide for development planning across
administrations.
A guide for international development assistance.

24

Transport Industry Directions 2016:

Philippine Macroeconomic Performance and Outlook

Emmanuel F. Esguerra
Secretary of Socio-Economic Policy and Planning
National Economic and Development Authority

08 March 2016