Philippine EconomicPhilippine EconomicPerformance and ProspectsPerformance and Prospects
Secretary Romulo L. NeriNational Economic and Development
Authority
The Philippines: The Philippines: Making Things HappenMaking Things Happen
Mid-Year Economic BriefingMid-Year Economic Briefing05 September 200605 September 2006
Presentation OutlinePresentation OutlineI. What has been achieved so
far?II. What are the numbers telling
us?III. What is the next wave of policy
agenda?
I. What Has Been Achieved So I. What Has Been Achieved So Far?Far?
Macroeconomic PerformanceMacroeconomic Performance(growth rates, in (growth rates, in percent)percent)
Source: NSCB
6.55.36.65.8GNP
6.16.75.76.4 Services
5.14.74.55.8 Industry
5.20.76.72.1 Agriculture
5.64.85.55.4GDP
2006200520062005
1st Semester2nd Quarter
Growth in GDP and GNP, 1998Q1 – Growth in GDP and GNP, 1998Q1 – 20061H20061H
Source: NSCB
-1.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
1998 1999 2000 2001 2002 2003 2004 2005 1H06
GNP GDP
Agriculture, Fishery & Forestry Agriculture, Fishery & Forestry (Growth rates, in percent)(Growth rates, in percent)
Source: NSCB
22ndnd Quarter Quarter
20042004 20052005 20062006
Agri, Fishery, Forestry
4.9 2.1 6.7
Agriculture 4.6 1.3 5.2
Palay 11.0 1.8 10.3
Corn 15.5 -10.1 49.2
Coconut, copra -1.3 3.1 0.2
Sugarcane 34.9 -25.4 3.4
Banana 3.0 12.4 9.7
Other crops -2.4 3.2 -3.2
Livestock 0.7 1.7 3.6
Poultry 0.9 2.5 1.6
Agri services 20.9 4.1 6.8
Fishery 6.0 4.8 11.0
Forestry 80.2 -10.6 10.0
Industry Industry (Growth Rates, in percent)(Growth Rates, in percent)
Source: NSCB
4.02.73.43.2Elect., Gas and Water
-0.42.3-3.84.5Construction
6.45.46.55.8Manufacturing
2.74.83.513.6Mining and Quarrying
5.14.74.55.8INDUSTRY
2006200520062005
1st Semester2nd Quarter
Services Services (Growth Rates, in percent)(Growth Rates, in percent)
2006200520062005
3.2
5.8
5.3
12.15.8
8.76.7
1st Semester
2.7
6.8
3.9
11.75.9
7.06.4
2nd Quarter
4.75.8O. Dwellings & R. Estate
6.56.0Private Services
3.84.4Government Services
12.210.0Finance5.25.2Trade
5.44.1Transport., Comm., Stor.
6.15.7SERVICES
Source: NSCB
Expenditure Expenditure (Growth Rates, in percent)(Growth Rates, in percent)
2nd Qtr 1st Sem
2005 2006 2005200
6
Personal Consumption 4.8 5.2 4.9 5.4
Government Consumption 12.4 0.4 7.5 3.9
Capital Formation -4.1 -5.8 -6.6 -3.8
Exports 1.6 22.3 1.5 17.5
Imports 2.6 4.0 0.3 2.5
Source: NSCB
Exports now Exports now surgingsurging
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
20.0
25.0
Time
Re
al G
ro
wth
Ra
te (
in p
erc
en
t)
2000 2001 2002 2003 2004 2005 2006
Source: NSCB
Foreign investment flowsForeign investment flows
150
250
350
450
550
650
750
J an-May '04 J an-May '05 J an-May '06
FOREIGN DIRECT FOREIGN DIRECT INVESTMENT, net (US$M)INVESTMENT, net (US$M)
100
300
500
700
900
1100
1300
1500
1700
1900
2100
J an-Jul '05 Jan-Jul '06Source: BSP
FOREIGN PORTFOLIO FOREIGN PORTFOLIO INVESTMENTS, net INVESTMENTS, net
(US$M)(US$M)
Strong inflows from Overseas Filipino Strong inflows from Overseas Filipino Workers Workers
Sources: BSP and POEA
5.16
5.96
4.8
5
5.2
5.4
5.6
5.8
6
6.2
1st half 2005 1st half 2006
OFW Remittance
(in US$ Billion)
Foreign currency reserves at historic Foreign currency reserves at historic highhigh
Gross International ReservesGross International Reserves(levels, in billion)(levels, in billion)
Source: BSP
12
13
14
15
16
17
18
19
20
21
22
2000 2001 2002 2003 2004 2005 Jul-06
GIR
3.0
3.2
3.4
3.6
3.8
4.0
4.2
4.4
Imp
ort
Co
ve
r
GIRImport Cover
The peso gains strengthThe peso gains strength
5051525354555657
F-
04
A-
04
J -
04
A-
04
O-
04
D-
04
F-
05
A-
05
J -
05
A-
05
O-
05
D-
05
F-
06
A-
06
J -
06
PHP:
US$
1
Source: BSP
Source: NSO
5
10
15
20
25
30
35
40
45
Ret
ail Pe
trol
uem
(Ph
p)
3.0
4.0
5.0
6.0
7.0
8.0
9.0
Infl
atio
n
Retail Petroleum (wtd ave) Headline Inflation Food Core Inflation
Inflation is subsidingInflation is subsidingMonthly Inflation, 2004-2005
( in percent)
2
4
6
8
10
12
14
16
18
20
2000 2001 2002 2003 2004 2005 2006
91-day T-bill Rate Overnight RRP Rate Bank Lending Rate
Stable and low interest rate Stable and low interest rate environmentenvironment
II. What Are The Numbers Telling II. What Are The Numbers Telling Us?Us?
Performance is on track; full-Performance is on track; full-year targets within reach.year targets within reach.
DBCC Macroeconomic Assumptions
Actual Performance
Dubai Oil (US$/bbl) 62.0- 64.0 62.5 (Jan – Jul)
Inflation 6.9 - 7.0% 7.0% (Jan – Jul)
Exchange Rate (P/$) 51 – 53 52.1 (Jan – Jul)
OFW inflows (g.r.) 10% 15.4% (Jan – Jun)
91-day T-bill rate 6.4 – 6.5% 5.4% (Jan – Aug)
Exports (g.r.) 10.0 16.8 (Jan – Jun)
MACROECONOMIC TARGETS MACROECONOMIC TARGETS (2006) (2006)
(Growth Rates, in percent)(Growth Rates, in percent)
Sources: MTPDP, DBCC
MTPDP 2004-2010
DBCC approved as of 20 September 2005
DBCC approved as of 27 March 2006
DBCCApprovedAs of Aug 2006
GNP 6.5-7.5 5.9-6.9 5.9-6.5 5.9-6.5GDP 6.3-7.3 5.7-6.6 5.5-6.2 5.5-6.1 Agriculture
4.2-5.2 4.0-5.0 3.5-4.0 3.4-3.9
Industry 7.2-8.2 5.1-6.1 5.4-6.2 5.4-6.2 Services 6.5-7.5 6.7-7.7 6.4-7.0 6.3-7.0
III. What Is The Next WaveIII. What Is The Next WaveOf Policy Agenda?Of Policy Agenda?
Policy DirectionsPolicy Directions• Develop the countryside through the
super regions• Increase infrastructure spending • Increase export competitiveness to
capture a bigger share in international trade
• Improve labor competitiveness and productivity
• Develop micro, small and medium enterprises
• Continue fiscal consolidation • Reforms for good governance
Philippine EconomicPhilippine EconomicPerformance and ProspectsPerformance and Prospects
Secretary Romulo L. NeriNational Economic and Development
Authority
The Philippines: The Philippines: Making Things HappenMaking Things Happen
Mid-Year Economic BriefingMid-Year Economic Briefing05 September 200605 September 2006
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