Presentation by NEDA Arsenio Balisacan 9.2.13

8/14/2019 Presentation by NEDA Arsenio Balisacan 9.2.13

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GETTING INCLUSIVE GROWTHAND COMPETITIVENESS RIGHT

ARSENIO M. BALISACAN

Socioeconomic Planning Secretary

National Economic and Development Authority

10th Management Association of the Philippines

Breakfast Dialogue with Pres. Aquino Cabinet2 September 2013


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I. Recent Economic Performance

II. The Development Challenge

III. Strategies to Sustain Growth and IncreaseCompetitiveness

IV. Prospects/Outlook and Target

Outline


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Recent Economic

Performance


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4.6%

3.2% 3.0%3.8%

6.5% 6.3%7.3% 7.1%

7.7% 7.5%

Q12011

Q22011

Q32011

Q42011

Q12012

Q22012

Q32012

Q42012

Q12013

Q22013

PHGDP

Growth

Rates

The Philippine economy has been growingrobustly.


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2012 2013

Q2

Real GDP

Growth

6.8% 7.5%

Agri, Fishery

and Forestry

2.8 (0.3)

Industry 6.8 10.3

Manufacturing 5.4 10.3

Services 7.6 7.4

Supply Side

11.1

32

22.1

56.9

9.4

32.7

21.8

57.9

0

10

20

30

40

50

60

70

Agri,Fishery

and

Forestry Industry Manufacturing Services

ShareinGDP(%)2012 2013Q2

Source:NSCB

GrowthRate(%)


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Demand Side

70.4

10.3

18.5

1.8 6.4

48.4 47.6

67

13.1 17.4

2.9 5.7

47.1 45.6

0

10

20

30

40

50

60

70

80

HouseholdFinal

Consumption

Gov'tFinalConsumption

CapitalFormation

PublicConstruction

PrivateConstruction

Exports Imports

ShareinGDP(%)2012 2013Q2

GrowthRate(%)

2012 2013

Q2

Household

Final

Consumption

6.6 5.2

Govt Final

Consumption

12.2 17.0

Capital

Formation

-3.2 13.2

Public

Construction

29.8 31.1

Private

Construction

11.5 9.0

Exports 8.9 (6.5)

Imports 5.3 (3.0)

Source:NSCB


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Sound macroeconomic fundamentals supportedthis remarkable performance.

4

3.5

3

2.5

2

1.5

1

0.5

0

0

10

20

30

40

50

60

70

80

2005 2006 2007 2008 2009 2010 2011 2012 2013*

NGDebttoGDP,LHS FiscalBalancetoGDP,RHS

0.0

5.0

10.0

15.0

20.0

0.01.0

2.0

3.0

4.0

5.0

6.0

7.08.0

9.0

2005 2006 2007 2008 2009 2010 2011 2012

NPLRatio,LHS

Realinterestrates,RHS

CAR,RHS

Sustainable fiscal and external position

Low and Stable inflation Favorable interest rate and sound banking system

0.0

1.0

2.0

3.0

4.0

5.0

6.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

2005 2006 2007 2008 2009 2010 2011 2012 2013*

HeadlineInflation

LowendTarget

*JanJuly2013

Note:HighandlowendtargetsarebasedonBSPpublicationonInflationTargetingdatedMarch2013;Actual

inflationfiguresarebasedon2006CPIseries.

* As of Q1 * As of Q1


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Global Competitiveness Index Report

Country 2012-2013GCI Ranking

2011-2012GCI Ranking

Singapore 2 2

Malaysia 25 21

Brunei 28 28

Thailand 38 39

Indonesia 50 46

Philippines 65 75

Vietnam 75 65

Cambodia 85 97

Source: Global Competitiveness Index 2012-2013, World Economic Forum

Our competitiveness ratings also increased


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The Development

Challenge


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Indicator Ave 2010 Ave 2012Ave 2012

(Jan &

Apr)

Ave 2013(Jan &

Apr)

Labor Force Level (000) 38,893 40,432 40,435 40,870

Employment Level (000) 36,035 37,607 37,587 37,880

Wage and salary workers (%

share to total employment)54.5 56.8 55.5 58.8

Unemployment Level (000) 2,859 2,825 2,848 2,990

Unemployment Rate (%) 7.3 7.0 7.0 7.3

Underemployment Level (000) 6,762 7,509 7,165 7,593

Underemployment Rate (%) 18.8 20.0 19.1 20.0

Source: Labor Force Survey, National Statistics Office

10

Employment creation remains a big challenge


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More needs to be done to achieve inclusive growth.....

64.0

8.9

12.8

14.3

64.18.8

12.7

14.4

2011

2012

28.8 28.6 27.9

16.6

0

5

10

15

20

25

30

35

40

S12006 S12009 S12012 FY2015

FirstSemester

Poverty

Incidence

AmongPopulation(%)

RegNCR,IIIandIV

OtherLuzon

Visayas

Mindanao


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Overall

Rank

Customs Infrastructure International

Shipments

Logistics

qualityand

competence

Tracking

andTracing

Timeliness

Singapore 1 1 2 2 6 6 1

Malaysia 29 29 27 26 30 28 28Thailand 38 42 44 35 49 45 39

Philippines 52 67 62 56 39 39 69

Indonesia 59 75 85 57 62 52 42

Vietnam 53 63 72 39 82 47 38Cambodia 101 108 128 101 103 78 104

Laos 109 93 106 123 104 111 118

Myanmar 129 122 133 116 110 129 140

In terms of logistics, there is stil l more room forimprovement

Source: World Bank (Connecting to Complete: Trade Logistics in the Global Economy)


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Sustaining Growthand Improving

Competitiveness


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Good governance has proven to be an effective platform uponwhich strategies should be implemented.

Macroeconomic (fiscal, financial, external) and political

stability fuels positive expectations that lead to growth.

Economic growth is necessary but not sufficient for poverty

reduction.

Growth strategies need to have spatial and sectoral

dimensions to ensure inclusivity.

Disasters can negate the gains and even push back

development.

14

Lessons Learned:Midterm Assessment of PDP 2011-2016 Implementation


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Guiding Principles

Efficiency (catalytic; government intervention facilitates and

not substitutes for private action) Equity (broadening opportunities through connectivity, human

capital investments)

Feasibility (doable within the Plan period)

Desired Outcomes

Rapid increase in employment opportunities to

significantly reduce the stock of unemployed persons

Significant reduction in poverty incidence to come as

close as possible to the MDG

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POSITIVEACTIONwithSpatialandSectoral Dimensions

(e.g.,economicandsocialprograms)

Boost

competitiveness

Improveaccess

tofinancing

MacroeconomicStability(fiscal,monetary,external,financial)

Science,

technology,

innovation

Educationand

skillsetofthe

workforce

Infrastructure

Investments

Rapidandsustainedgrowth

jobs

Marketdemand

INCLUSIVEGROWTH(MASSIVEEMPLOYMENT

CREATION,REDUCEDPOVERTYINCIDENCE)GoodGovernance

(PropertyRights,

RegulatoryEfficiency,

Alignmentofpolicies)NationalSecurity,

and

EcologicalIntegrity

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We will do more to pursue inclusive growth...


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Infrastructure

Human capital

Governance

Sustaining growth and improve competitiveness

Maintain Macroeconomic stability

Investments in:

Infrastructure to GDP Ratio Share of Social Spending to

Total Budget1.Ensuring high quality public

service delivery;

2.Curbing corruption;

3.Strengthening the rule of law;

and,

4.Enhancing citizens access to

information and participation in

governance.

Governance Reforms/Strategies


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Positive Actions that consider sectoral andspatial dimensions

Infrastructure development focusing on connectivitybetween regions/provinces, esp. transport and power

New growth drivers outside NCR

(agri/agribusiness, tourism, IT/BPM in next wavecities, public housing, manufacturing, infra/logistics)

Investment in human capital to improve the

competitiveness/ productivity of current and future stockof the labor force

Provision of social protection against income and

employment shocks for the most vulnerable Improved resilience to natural disasters


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Source: PublicInvestmentProgramasofMay 31,2012

Achieving the Target ofP4.7 Trillion* Investment Plans


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Strategic Core Investment Projects 2013-2016

Source:HighlightsoftheRevalidated20112016PIPMay31,2013FirstDraft


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Source: NEDA Staff calculations; DBM (actual data)

* 2011 and 2012 are actual figures

1.6

2.4 2.6

3.0

4.1

5.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

2011 2012 2013 2014 2015 2016

Infrastructure Development:Increase in NG infrastructure spending from 2.4% in2012 to 5% of GDP by 2016


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Prospects/Outlook

and Target


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2012 2013 Q2 2013 2014

Actual Actual Outlook Target

GDP 6.8 7.6 6.0-7.0 6.5-7.5

Agriculture 2.8 1.4 3.5-4.5 3.2-4.2

Industry 6.8 10.6 6.4-7.5 7.4-8.5

Services 7.6 7.1 6.3-7.3 6.7-7.6

Source:NEDAasapprovedintheDBCC

We strive to get growth going in 2013 and beyond


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Strong performance of agri-based manufacturing,

and recovery of semiconductor and electronics Robust public and private construction

Buoyant domestic and local tourism

Continued strong growth of wholesale and retail

trade

Real estate, particularly housing

Greater productivity in agriculture and rebound of

the fisheries subsector

Growth Drivers Supply Side


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Higher public construction and investments in

power generation Robust private investment in construction and

durable equipment

Strong household consumption due to betteremployment opportunities, strong remittance

inflows, and low and stable inflation

Increased tourist arrivals and more demand forbusiness process management

Improvement of external trade conditions

Growth Drivers Demand Side


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Weather disturbances (e.g., Typhoons, prolongedmonsoon rains)

Delays in the implementation of infrastructure

development projects, particularly power

Excessive capital inflows/outflows Uncertainty of economic recovery in the Euro area and

Japan

Tapering of monetary stimulus in the US Further economic slowdown in BRIC, particularly China

Possible spike in commodity prices (e.g., petroleum)

We also remain vigilant against the followingnear-term global and domestic risks to growth...


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*Luncintel,GlobalIndustrialApplicationPaperIndustry20122017:Trend,Profit,andForecastAnalysis

while taking advantage of opportunities

Improvement in the global economic environment

- Sustained consumption growth in emerging markets

Demographic transition

- Rising middle-income class, continued growth of working-age

population

Increased economic integration of ASEAN member countries

- Open flow of goods, services, labor, technology, finance

More financial resources available

- Fiscal space

- Investment credit-rating


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GETTING INCLUSIVE GROWTHAND COMPETITIVENESS RIGHT

ARSENIO M. BALISACAN

Socioeconomic Planning Secretary

National Economic and Development Authority

10th Management Association of the Philippines

Breakfast Dialogue with Pres. Aquino Cabinet

2 September 2013

Documents

Presentation by NEDA Arsenio Balisacan 9.2.13