Philippine Macroeconomic Outlook,

Transport Directions, and Regional Developments

Emmanuel F. Esguerra
Socioeconomic Planning Secretary

PISFA and PortCalls Shipping Conference

Davao City
27 April 2016

Outline

I.
II.
III.
IV.

Macroeconomic Trends
Near-term Growth Outlook and Risks
Transport Directions
Regional Developments

Macroeconomic Performance

-1.0
1955-1960
1956-1961
1957-1962
1958-1963
1959-1964
1960-1965
1961-1966
1962-1967
1963-1968
1964-1969
1965-1970
1966-1971
1967-1972
1968-1973
1969-1974
1970-1975
1971-1976
1972-1977
1973-1978
1974-1979
1975-1980
1976-1981
1977-1982
1978-1983
1979-1984
1980-1985
1981-1986
1982-1987
1983-1988
1984-1989
1985-1990
1986-1991
1987-1992
1988-1993
1989-1994
1990-1995
1991-1996
1992-1997
1993-1998
1994-1999
1995-2000
1996-2001
1997-2002
1998-2003
1999-2004
2000-2005
2001-2006
2002-2007
2003-2008
2004-2009
2005-2010
2006-2011
2007-2012
2008-2013
2009-2014
2010-2015

Average growth in 2010-2015 is the highest 6-year average growth since the
mid-1970s.

in %
8.0

Real GDP growth (6-year moving average)

7.0

1971-1976;
1972-1977;
1973-1978

6-yr moving average

Source: NEDA Staff calculations

2010-2015

6.0

5.0

4.0

3.0

2.0

1.0

0.0

6.2% 2010-2015 ave

4

Structural transformation taking place

Investment and industry are increasingly becoming major drivers of

GDP growth
Demand Side
7.0

8.0
7.0

Supply Side
6.2%

Ave. growth

6.0

3.0

6.0

5.0

5.0

4.0

6.2%

4.5%

4.5%
4.0

2.8%

3.0

2.0

2.8%

2.0

1.0
0.0

1.0

-1.0

0.0

-2.0
1990-1999

Consumption
Investment

2000-2009

2010-2015

Government
Net exports

1990-1999

Agriculture

2000-2009

Industry

2010-2015

Services

Favorable Macroeconomic Trends

Recent performance indicates that the economy is steadily growing despite
the initial slowdown
Growth of GDP by Component (%)
Fourth Quarter
2014
2015

FY
2014

2015

Supply side
Agriculture
Industry
o.w. Manufacturing
Services

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

5.0
9.4
3.0
8.0
12.8
9.9
6.6

6.4
17.4
13.5
22.5
7.1
13.3
6.3

5.4
1.7
5.4
6.8
11.3
8.7
6.1

6.2
9.4
13.6
14.0
5.5
11.9
5.8

Demand side
Private consumption
Government consumption

Capital Formation
o.w. Fixed capital formation
Exports
Imports

GROSS DOMESTIC PRODUCT

Source: Philippine Statistics Authority (PSA)

Our vibrant economy is producing more and better jobs...

Employment Generated 2000- Jan 2016 (000)

(%)

7.0

7.0

7.1
7.0

20.0
19.0
18.0

6.6

20.0
19.3

19.3
18.8

6.3

19.7

18.4 18.5
5.8

17.0

6.5

6.0

65
4,310

Employment Generated

21.0

5,000

7.5

7.4

Unemployment Rate

Underemployment Rate

22.0

4,000

63.2

3,782
3,448

3,000

60

59.3
56.7

55
2,000
1,000

51.9
50.3

752

50

183
16.0

5.5

2010

2011

2012

2013 2014a/ 2015b/

Jan
'2016

45
2000-2004 2005-2009 2010-2014

2015c/ Jan '2016d/

Employment Generated ('000)

Underemployment (%)

Unemployment (%)

Wage and Salary Worker (% in Total Employment)

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
d/ January 2016 employment generation estimate excludes the province of Leyte.
*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

Wage and Salary Workers (% in Total

Employment)

Unemployment and Underemployment rates

Monetary and financial conditions fully support growth

Real Interest Rate and Non-performing Loans
(NPLs), 2005- 2016

Headline and Core Inflation, Jan 2013- March 2016

6.0

5.0
4.0

9.0

20.0

8.0

18.0

7.0

16.0

6.0
5.0

3.0

NPL
Ratio, LHS*

12.0
Real interest
rates, RHS**

4.0
3.0

2.0
1.0

Jan-13
Feb-13
Mar-13
Apr-13
May-13
Jun-13
Jul-13
Aug-13
Sep-13
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Jan-15
Feb-15
Mar-15
Apr-15
May-15
Jun-15
Jul-15
Aug-15
Sep-15
Oct-15
Nov-15
Dec-15
Jan-16
Feb-16
Mar-16

0.0

Core Inflation

Headline Inflation

14.0

CAR, RHS***

10.0
8.0
6.0

2.0

4.0

1.0

2.0

0.0

0.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

* as of Jan 16 ** as of Jan 16 *** as of Q3 2015

Robust External Position

Continuous remittances amidst
slowdown in deployment

Increasing Net FDI

Net FDI (US$ million)
growth (%)

3215

5740

5724

3737

2007
1070

2010

2011

2012

2013

2014

100
80
60
40
20
0
-20
-40
-60

140

125.1

Average Growth of FDI, 2012-2014

120
100

60.0

2.9 4.0

80

26.5 2.0

60

0.0

500

OF Deployment
0
('000), RHS

6.0

20.0

Cash Remittances1,000
(US$mn), LHS

10,000

80.0
40.0

1,500

20,000

2015

Positive Current Acct. &

Declining External Debt

0.0

85.0

47.5

40
20

External Debt to GDP ratio - LHS

Current Account to GDP Ratio - RHS
Source: Bangko Sentral ng Pilipinas

2,000

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

7000
6000
5000
4000
3000
2000
1000
0

30,000

8.6

7.5

6.5

3.4

2.0

1.4

-8.6

ID

VN

SG

IN

CH

KR

MY

0
-20

TH

TW

PH

Our stronger fiscal position has been recognized, earning an

investment-grade status from major CRAs for the first time in 2013
Fiscal side:

Modest fiscal deficit; Declining Public debt & interest payments; Increasing
reliance on domestic financing
Result: resilient fiscal position
Fiscal Position

Share of expenditures allocated to interest payments

35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0

18.00
13.00
13.9

8.00
3.00
-2.00

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

-7.00
Fiscal Position

Tax Effort

National Government Borrowing Program (%)

National govt outstanding debt (% of GDP)

80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0

Revenue Effort

100.0
16.4
80.0

35.4

34.4

6.1

27.9

34.8

24.5

15.5

42.4

60.0
40.0

83.6
64.6

65.6

65.2

2009

2010

2011

93.9
72.1

20.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 end
Feb
2016

75.5

84.5

57.6

0.0
2012

Domestic

2013

2014

Foreign

2015

as of Feb 2016
10
2016 Proposed

Near-term Growth Outlook and Risks

The Philippines is expected to remain one of the fastest

growing economies in Asia
8.0

GDP Growth of Selected Asian Economies

(FY2015, FY2016f & FY2017f)
7.5 7.5 7.5
6.9

7.0

6.7
6.3

6.0

6.0

5.8

6.0

5.8

6.0

6.2
5.5
5.0

5.0

5.0

5.1
4.8

4.5

4.0

3.6
3.2

3.2

2.9

2.8

3.0

2.0

2.0
1.0
0.0
India

China

Vietnam

2015
Source: IMF-WEO.

Philippines

Malaysia

2016

Indonesia

Thailand

Singapore

2017
12

The vibrant view on the Philippine economy is also shared by

the private sector.
Consensus Forecast, Real GDP growth (in %)

ADB
Barclays
Citi
Fitch rating
Goldman Sachs
HSBC
IMF
Metrobank Research
Moodys
Nomura
Standard and Poors
Standard Chartered Bank
UNESCAP
WB
Median
Mean
Source: Various sources, as of 13 April 2016

2016
6.0
5.5
5.4
6.0
6.0
5.8
6.0
6.3

2017
6.1
6.0
6.0
5.8
6.2
-

6.0
6.5
6.0
5.7
6.3
6.4
6.0
6.0

6.0
6.3
5.8
6.2
6.0
6.0

Outlook and Targets for 2016-2018

Real GDP Growth Rate (in %)

7.8

8
7

6.1

5.8
6.8

8.0

7.6
7.0

6.6

5
4
3
2
1
0
2014

2015
actual

2016(T)
Low-end target

2017(T)

2018 (T)

high-end target

1/ Assumptions adopted by the Development Budget Coordination Committee (DBCC) on February 2016

Expected Drivers of Growth

Demand side

Household consumption: remittance inflows, strong consumer confidence, low

inflation, low interest rates
Government spending: expansion of social protection programs (i.e. CCT, K12, Philhealth coverage, etc)
Investment: public construction, including infrastructure and reconstruction;
private construction
Exports of services: good prospects for BPM and tourism
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

15

Risks to Growth
We remain vigilant and well- positioned against 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 current El Nino phenomenon

Possible La Nina in the second semester of 2016
Disruptions in the peace process
Delays in infrastructure and reconstruction projects
Logistics bottlenecks
And thin power reserves (potential impact of El Nino on
hydropower)
16

Transport Directions in the Medium Term

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

6
5.0

5.2

5.4

1000

4.3
800

600

2.7

2.7

400

766.5

876.6

1018.7
2

595.8
200

346.2

306.9

0
2013

2014

2015

2016

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

2017

2018

Ratio to GDP (rhs)

Source: Department of Budget and Management

18

Bulk of which are slated for transportation, social, and energy

infrastructures..
Total Infrastructure Investment by Sector
(2013-2016 and beyond)
ICT
0.01
Other Public
Infrastructure
0.04
Transportation
0.43

Water
Resources
0.14
Energy
0.18

Social
Infrastructure
0.20

Top 10 Agencies with the Largest Investment

Requirements in the CIIP
Rank

Name of Agency

# of Projects

Investment Cost
(in Billion PhP)

DPWH

323

2,269.35

DOTC

588

1,397.76

DOE

275

1,327.06

DOH

39

503.71

DepEd

310.77

OPAFSAM

258

234.87

BCDA

14

210.22

HUDCC

10

173.67

DILG

25

131.50

10

DA

108

98.91

1647

6,657.83

Total

Share of Top10 Agencies to Total Infra

Investments =
Source: Comprehensive & Integrated Infrastructure Program (CIIP) : PhP7 .27Tn (as of December 2015)

91.61% of all CIIP

projects

These projects are funded mostly by the national government

Comprehensive and Integrated Infrastructure Program (CIIP), by Funding Source
Total Infrastructure Investment of PhP7.27 trillion;
Years: 2013-2016 and Beyond

[CELLRANGE]
[CATEGORY NAME]
[PERCENTAGE]

[CELLRANGE]
[CATEGORY NAME]
[PERCENTAGE]

[CELLRANGE]
[CATEGORY NAME]
[PERCENTAGE]

Source: Comprehensive & Integrated Infrastructure Program (CIIP) : PhP7 .27Tn (as of December 2015)

complemented by private investments in public infrastructure.

Status of PPP Projects (as of 01 April 2016)

No. of Projects

Amount
(PHP bn)

Contract Awarded

12

196.53

Other projects under Implementation

106.73

Projects under Procurement

15

579.76

For Approval of Relevant Government Bodies

101.94

For Finalization of Project Structure

536.03

Projects with Ongoing Studies

47.93

Projects Under Conceptualization/Development

13

NA

51

1,568.92

Projects by Status
Projects Under Implementation

PPP Pipeline

Total
Source: 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

Multimodal Transport
Multimodal Transport Framework is vital in
ensuring that multimodal transport systems
are

developed

as

seamless

networks

servicing all nationally strategic important

corridors, and implemented in a timely
manner.

Recent Efforts for Transport Systems Development

Program/Study
Survey
on
Mindanao
Infrastructure Network (SMLIN)

Focus Area
Logistics Logistics Infrastructure System in Mindanao

Department of Tourism (DOT)- Department

of Public Works and Highways (DPWH)
Convergence
Program
(Convergence
Program)

Logistics Infrastructure providing road access

to/from tourist destination areas and other
transport infrastructures such as ports and
airports

Master Plan on High Standard Highway Road network and routes for HSH within the
(HSH) Network Development
sphere of 200-km radius from Metro Manila and
select corridors in Davao to meet future traffic
demand.

Data Collection Survey on

Resilient Feeder Ports and
Network

Disaster- Disaster-resilient network of feeder ports to

Logistics ensure a secure and smooth logistics even in
time of disaster

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

Regional Developments: Davao Region

Efficient logistics are required to support the following

priority industry clusters in Davao Region:

Current issues on sea transport:

Limited capacity of Mindanao seaports, including
berthing structure, transit/cargo shed area for noncontainerized cargo, container yard for containerized
cargo and passenger terminal building.
Need to reduce domestic cargo rates as rates in
Mindanao are more expensive than foreign cargo rates

Mindanao Spatial Strategy/Development

Framework (MSSDF)
Position the Davao Region to be the Southeast Asia
and Pacific Logistic hub of Mindanao
Metropolitan Davao to serve as the islands
international trading center with direct international
linkages through sea and air

ASEAN Economic Community

With Mindanao playing a critical role in the AEC, the
following sea linkages shall be established or enhanced:
Zamboanga-Sandakan (Malaysia)
Davao/General Santos-Bitung, Manado (Indonesia)
Zamboanga-Muara (Brunei)
Tawi-tawi-Tarakan (Indonesia)

Three-year Rolling Infrastructure Program (TRIP) :

Region XI Major Transport Projects
Project

Agency

Output

Province

Project Cost
(PhP Bn)

Status

Mawab-Maragusan-Caraga Road,
Davao Oriental 1st LD, Compostella
Valley 1st LD, Compostella Valley
2nd LD

DPWH

Construction of 86.84 km
road project

Compostela
Valley

5.59 Bn

Ongoing

Matanao-Kiblawan-Padada Road
incl. Bridge, Davao del Sur 2nd LD

DPWH

Construction of 54.343 km
road project

Davao del Sur

1.82 Bn

Ongoing

Davao city Bypass Construction

DPWH

Construction of 37.17 km
road, 2.28 km Tunnel & 5.13 Davao del Sur
lm Bridge

Dnas-Laak Rd

DPWH

Construction of 64 km road
project

Compostella
Valley

2.12 Bn Proposed

Maragusan-Pantukan Rd

DPWH

Construction of 54 km road
project

Compostella
Valley

1.79 Bn Proposed

Nabunturan-Laak Rd

DPWH

Construction of 52.34 km
road project

Compostella
Valley

1.73 Bn Proposed

16.81 Bn Proposed

Three-year Rolling Infrastructure Program (TRIP) :

Region XI Major Transport Projects
Project

Agency

Output

Province

Project Cost
(PhP Bn)

Status

Laak-Malaybalay City Rd

DPWH

Construction of 46 km road
project

Compostella
Valley

1.52 Bn

Proposed

Jct. Davao Diversion Rd-TigattoMandug-Callawa-FatimaMalabog Rd-Valencia

DPWH

Construction of 95.805 km
road project

Davao del Sur

4.14 Bn

Proposed

San Agustin- Sto. Nio-KisuladTubalan Port Rd

DPWH

Construction of 30 km road
project

Davao del Sur

1.44 Bn

Proposed

Carahayan-Alegado-Glan Rd

DPWH

Construction of 75 km road
project

Davao del Sur

3.11 Bn

Proposed

Nuing-San Isidro-MolmolLagimit-Big Margus-Glan Rd

DPWH

Construction of 35 km road
project

Davao del Sur

1.48 Bn

Proposed

Balut Island Circumferencial Rd

DPWH

Construction of 55 km road
project

Davao del Sur

3.03 Bn

Proposed

Three-year Rolling Infrastructure Program (TRIP) :

Region XI Major Transport Projects
Project

Agency

Output

Province

Project Cost
(PhP Bn)

Status

Sarangani Island
Circumferencial Rd

DPWH

Construction of 65 km road project

Davao del
Sur

3.58 Bn

Proposed

Pangian-PinalpalanDemolok Rd (Malungon,
Sarangani Province
Boundary)

DPWH

Construction of 25 km road project

Davao del
Sur

1.11 Bn

Proposed

Mati-Lupon-Manay Rd

DPWH

Construction of 36.115 km road project

Davao
Oriental

1.72 Bn

Proposed

Modern container port with 2700 ground

DOTC/PPA slots and capable of handling up to 9000 Davao City
TEU ships

2.50 Bn

Procurem
ent Stage

Davao del
Sur, Part of
South
Cotabato

2.20 Bn

Proposed

Davao Sasa Port

Modernization PPP
Project

Sugarcane Farm-To-Mill
Roads (FMR) with Block
Farms - Region XI

SRA

185 km. FMR

Philippine Macroeconomic Projections,

Transport Direction, and Regional Developments

Emmanuel F. Esguerra
Socioeconomic Planning Secretary

PISFA and Portcalls Shipping Conference

Davao City
27 April 2016