Evaluating Dutertenomics

• PH growth narrative
intact
• Room for increased
fiscal spending
• Banks still liquid;
Interest rates remain
low
PH Growth Narrative Intact
GDP Growth (at constant 2000 prices)
8 GDP Growth (2016):
7 6.8
6.6
6.4
6.7
6.9
7.1 7.1

6.6 6.8%
[VALUE].0
6
5.6 5.6

5.1 PH Government Target

5 (2017):

4 6.5%-7.5%
3

1
Q114 Q214 Q314 Q414 Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416
Source: Philippine Statistics Authority
Room for Increased Fiscal Spending
Public Deficit (% of GDP)
4
3.7
3.5
3.5

2.6
2.5 2.4
2.3

2
2

1.5 1.4

1
1 0.9 0.9

0.6
0.5
0.2

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Bureau of the Treasury

Room for Increased Fiscal Spending
External Debt (% of GDP)
70

60

50

40

30

20

10

0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Bureau of the Treasury

Banks still liquid; Interest rates remain low
Lending rates are down by single-digits since 2006
Bank Lending Rates, Average (%)
21.000

19.000

17.000

15.000

13.000
10.14%
11.000 (2005)

9.000

5.64%
7.000
(2016)

5.000

3.000
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: BSP
Continued growth in the BPO industry

Source: taken from the DTI

Bureau of Investments
OF Remittances growth likewise steady

Overseas Filipinos' Cash Remittances

3,000 20.0

2,500 15.0

2,000 10.0

1,500 5.0

1,000 0.0

500 -5.0

0 -10.0
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar
2013 2014 2015 2016 2017 p
Level (in $ million) YoY Growth (%)
PH demographic profile remains a
fundamental strength
• Percentage of young people
(ages 0-14) compared to
population is high in the
Philippines compared to its Asian
neighbors.
• PH working age population (ages
15-64) increasing while those of
Thailand, China, S. Korea and
Japan are declining.
PH demographic profile remains a
fundamental strength
Population ages 0-14 as of 2015 (% of total)
35.00
31.95 31.60
30.00 27.69
25.02
25.00 23.09

20.00 17.71 17.23

15.54
15.00 13.99

10.00

5.00

0.00
Philippines Cambodia Indonesia Malaysia Vietnam Thailand China Singapore Korea, Rep.
Population ages 0-14 (% of total)

Source: World Bank

 PH demographic profile remains a
fundamental strength

Population ages 15-64 (% of total)

76

74

72

70

68

66

64

62

60
China Korea, Rep. Thailand Philippines Japan
2012 2013 2014 2015
Source: World Bank
Current account ratio declining, but nothing to worry
about.

• Increase in capital goods imports

• Flexible exchange rate allows the
country to roll with the shocks
• Lower exchange rate increases
purchasing power of OFWs and
makes BPO firms more
attractive.
Current account ratio declining, but nothing
to worry about.
Import Growth (%) vs. Current Account Ratio (% of GDP)
40 4.5000

4.0000
30
3.5000

20 3.0000

2.5000
10
2.0000

0 1.5000
2012 2013 2014 2015 2016
1.0000
-10
0.5000

-20 0.0000
Total Import Growth Capital Goods Import Growth Current Account Ratio

Source: Bangko Sentral ng Pilipinas; Philippine Statistics Authority

World Oil Prices Remain Low
Dubai Crude
150

110

70

30

-10
Manufacturing Growth Remains Robust
GDP Growth by Major Sectors
12.0

10.0

8.0

6.0
GROWTH RATE (%)

4.0

2.0

0.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-2.0

-4.0

-6.0
Agriculture, Hunting, Forestry & Fishing Manufacturing Services

Source: Philippine Statistics Authority

Foreign investment to the Philippines on the rise albeit smaller
compared to its neighbors

Foreign Direct Investments, Net Inflows ($ million)

30000

25000

20000

15000

10000

5000

0
2000 2005 2010 2011 2012 2013 2014 2015
-5000

-10000
Philippines Vietnam Indonesia

Source: ADB, Key Indicators for Asia and the Pacific 2016
Conclusion
Economy will
continue on its
high growth track
despite rising
world interest
rates and
growing
protectionism.
 Unemployment rate
7.5

7
6.7
6.6 6.6
6.5
6.4
6.1
6
5.7
5.6
5.4

4.7

2014 2015 2016 2017

January April July October
Source: Philippine Statistics Authority
 Inflation rate (%)
4.94.9
4.54.4 4.44.3
4.24.1 4.1
3.9
3.7
3.33.43.4
2.7 2.7
2.42.52.4 2.52.6
2.2 2.32.3
1.91.91.8
1.6 1.5 1.6
1.2 1.3
1.1 1.11.1
0.8 0.9
0.6
0.40.4
Jan

Jan

Jan

Jan
March

Sept
May

March

Sept

Sept

March
May

March
Aug

Aug

May

Aug
Oct

Oct

Oct
Feb

Apr

July

Feb

Apr

July

Feb

Apr

July

Feb

Apr
Nov

Nov

Nov
Dec

Dec

Dec
June

June

June
2014
Source: Philippine Statistics Authority 2015 2016 2017
Families considering themselves poor
(Percentage)

55 55 55 55
54
53
52 52
51 51 51
50 50 50 50
49
47
46
45
44
42

March May Aug Dec March June Sept Dec March June Sept Dec March June Sept Dec April June Sept Dec March
2012 2013 2014 2015 2016 2017

Source: Social Weather Stations Survey

Families whose food is poor Self-Rated Poverty
(Percentage) By location, March 2017

35 57
34 53
50

31 31

30 36
April June Sept Dec March
2016 2017
NCR Balance Luzon Visayas Mindanao

Source: Social Weather Stations Survey

1. Bad experiences from ODAs
• SCTEX – doubled in budget; overestimated traffic volume, delayed
• Northrail (China ODA) – unqualified contractor; failed to push through
• NBN-ZTE deal – infused with corruption

ODAs suffer from tied suppliers, foreign exchange exposure.

2. Security risk not factored in ODAs
3. Hybrid PPPs problematic –
interface risks and same
problem as ODAs
4. Government hasn’t shown any capabilities
to deliver
However, there are recent bright spots
• Change in Rice Policy

• Change of leadership in both DILG and DENR

• Appointment of Nestor Espenilla as BSP

Governor
However, there are recent bright spots
• Passage of the tax reform package in House Committee

• Revenue target will not be attained but structural reform will happen

• No cronyism so far
 CONCLUSION
Philippines will continue to grow but
Dutertenomics could be improved with more
pro-inclusive growth policies especially in
agriculture, mining and forestry and also more
emphasis on PPP rather than ODA.