Philippine Macroeconomic Outlook,

Transport Directions, and Regional

Developments

Emmanuel F. Esguerra
Socioeconomic Planning Secretary

PISFA and Portcalls Shipping Conference

Cebu City
28 April 2016

Outline of the Presentation

I.
II.
III.
IV.

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

Macroeconomic Performance

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
6.0
5.0

19711976;
19721977;
19731978

20102015

4.0
3.0
2.0
1.0
0.0
-1.0
6-yr moving average
Source: NEDA Staff calculations

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
6.0

6.2
%

Ave.
growth

3.0

4.5
%

2.8
%

6.0
4.5
%

4.0
3.0

2.0

2.8
%

2.0

1.0
0.0

1.0

-1.0
-2.0

6.2
%

5.0

5.0
4.0

Supply Side

0.0
1990-1999

2000-2009

Net exports
Government

2010-2015

Investment
Consumption

1990-1999 2000-2009 2010-2015

Agriculture
Services

Industry

Favorable Macroeconomic Trends

Recent performance indicates that the economy is
steadily growing despite the initial slowdown
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

GROSS DOMESTIC
6.6
PRODUCT
Source: Philippine Statistics Authority (PSA)

6.3

6.1

5.8

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

Our vibrant economy is producing

more and better
Employment Generated 2000- Jan 2016
Unemployment and Underemployment
(000)
jobs...
rates (%)
7.4
22.0

7.5

7.1
21.07.0
7.0
20.0 7.0
20.0 19.7
19.3
19.3
6.6
18.8
18.5
6.3 6.5 Unemployment Rate
Underemployment Rate19.0 18.4
18.0
17.0
16.0

5.86.0

2010

5.5

Underemployment (%)
Unemployment (%)

EmWage
ployment
and Generated
Salary Workers (% in Total Employment)

Employment Generated ('000)

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

Monetary and financial conditions fully

support growth
6.0

Headline and Core Inflation, Jan 2013March 2016

5.0

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

9.0

20.0

8.0

18.0

7.0

4.0

6.0
5.0

3.0

4.0
3.0

2.0
1.0
0.0

Core Inflation

Headline Inflation

NPL
Ratio,
LHS*
Real
interest
rates,
RHS**
CAR,
RHS***

16.0
14.0
12.0
10.0
8.0
6.0

2.0

4.0

1.0

2.0

0.0

0.0

* 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)
7000
6000
5000
4000
3000
2000
1000
0

30,000

growth (%)
5740

3215

5724

3737

2007
1070

2010

2011

2012

2013

2014

2015

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

Positive Current Acct. & Declining External Debt

70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0

6.0
5.0
4.0
2.9
3.0
2.0
1.0
0.0

26.5

External Debt to GDP ratio - LHS

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

2,000

25,000

1,500

20,000
15,000

1,000

Cash
Remittances 500
(US$mn), LHS

10,000
5,000
0

140

125.1

Average Growth of FDI, 2012-2014

120
100

85.0

80
60

47.5

40
20
0
-20

TH

TW

PH

8.6

7.5

6.5

3.4

2.0

1.4

ID

VN

SG

IN

CH

KR

MY

-8.6

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

Share of expenditures allocated to interest payments

35.0
30.0
25.0
20.0
15.0
10.0
5.0
0.0

Fiscal
Position

18.00
13.00

13.9

8.00
3.00
(2.00)
(7.00)
Fiscal Position

80.0
70.0
60.0
50.0
40.0
30.0

National govt outstanding debt (% of GDP)

Tax Effort

National Government Borrowing Program (%)

100.0
80.0 35.4

34.4

34.8

16.4

6.1
27.9

42.4

24.5

15.5

60.0
40.0

20.0

20.0

10.0

0.0

0.0

Revenue Effort

64.6

65.6

65.2

83.6

Domestic
10

93.9
72.1

Foreign

57.6

75.5

84.5

Near-term Growth Outlook and Risks

The Philippines is expected to remain one of the fastest

growing economies in Asia
GDP Growth of Selected Asian Economies
(FY2015, FY2016f & FY2017f)

Source: IMF-WEO.

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

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

Source: Various sources, as of 13 April 2016

Outlook and Targets for 2016-2018

Real GDP Growth Rate (in %)

9
8
7

7.6

8.0

6.8

6.1
5.8

6.6

7.0

5
4
3
2
1
0
2014

2015
actual

1/

2016(T)

2017(T)

Low-end target

high-end target

2018 (T)

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, K-12,
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

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)

18

Bulk of which are slated for transportation, social,

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

ICT; 1%
Other Public Infrastructure; 4%
Transportation; 43%
Water Resources; 14%

Energy; 18%
Social Infrastructure; 20%

Top 10 Agencies with the Largest

Investment
Requirements in the CIIP
Investment
Rank

Name of
Agency

# of
Projects

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

Government; 61%
Others / Source Not Indicated; 12%

Private Sector; 27%

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

complemented by private investments in

public infrastructure.
Status of PPP Projects (as of 01 April 2016)
Projects by Status

No. of
Projects

Amount
(PHP bn)

12

196.53

106.73

15

579.76

Projects Under Implementation

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

For Finalization of Project Structure

536.03

Projects with Ongoing Studies

Projects Under
Conceptualization/Development

13

47.93
NA

51

1,568.92

Source: PPP Center

Total

101.94

Underpinned by stronger links between Investment

Programming and Budgeting

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 Disaster- Disaster-resilient network of feeder ports to

Resilient Feeder Ports and Logistics ensure a secure and smooth logistics even in
Network
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

Road Roll-on/Roll-off Terminal System: Reduction in

the domestic cost of logistics
Sample
Case/Route

Costs
W/O RRTS

Costs
With RRTS

% Cost
Savings

Batangas-Calapan
Route
Goods: Beer

PhP 30,400

PhP 13,000

57%

Manila-Cebu Route
Goods: Dry Goods

PhP 50,000

PhP 40,000

20%

PhP 32,000

PhP 23,360

27%

Zamboanga
CityBato, Cebu Route
Goods:
Assorted
Fish

Regional Developments: Central Visayas

2015 Central Visayas Economic Situationer

Central Visayas is expected to perform better in 2015
despite concerns of falling exports due to weak global
trade and the unfavorable impact of the El Nio on
agriculture.
Of the ten indicators being monitored with available data,
eight showed better performances. These include visitor
arrivals, construction activities, power consumption, retail
trade, BOI-registered investments, IT/BPM investments,
employment, and prices.

Major Developments in the shipping industry:

Providing 24/7 customs services to address port
congestion.
The feasibility study for the new and bigger
Cebu International Port is currently being
reviewed by the DOTC for submission to NEDA
for ICC/NEDA Board approval.

Central Visayas Ongoing/Planned Transport Projects, 2016

Project Title
Mactan-Cebu
International Airport
New Passenger
Terminal
New Bohol Airport
Construction and
Sustainable
Environment
Protection Project
Enhancement of
Coastal
Communications
Systems
Bus Rapid Transit

Location Cost PhP

Funding
Source

Status

Lapu-lapu 17.5 Billion DOTC/GMCAC

City, Cebu

On-going

Panglao,
Bohol

Ongoing

7.44 Billion DOTC/JICA

Philippine 507 Million JICA grant

Coast
Guard
Cebu City 10.62
Billion

On-going construction of the

Control Center within PCG
premises and the two Radar
Stations in Lapu-Lapu City
Ongoing detailed
engineering study.

Agence
Francaise de
Development
Bank
Cebu International Tayud,
9.135
Official
Feasibility Study completed
Port
Consolacio Billion
Development
n, Cebu
Assistance
(ODA)
Sources: Visayas Spatial Development Framework (VSDF), TRIP, Regional CIP & Metro Cebu Roadmap
Third
Acquiring approvals from Toll
StudyCebu-Cordova Cebu City 27.9 Billion Metro Pacific
Bridge
Tollways
Regulatory Board, Philippine

Project Title
Central Spine RORO
Project

Location

Cost PhP

Funding
Source

*RORO Port improvements

Cebu and Bohol 7.5 Billion
ODA

Toledo International
Container Port
South Cebu International
Cruise Ship Terminal
Redevelopment of the
existing Cebu Base Port

Toledo, Cebu

Improvement of the Ports

of Ubay, Tabuelan,
Tubigon, Tuburan,
Guihulngan, Larena

8.5 Billion

Status
Feasibility Study is
being validated by
DOTC
for Feasibility Study

Cebu

Public Private
Partnership (PPP)
4.5 Billion

for Feasibility Study

Cebu

2.3 Billion

Region 7

0.745
Billion

Cebu Ports
Authority
corporate fund
PPA fund

still in the project

concept
Proposal phase

* Long term proposals (VSDF)

Friendship Bridge Cebu Cebu and Bohol 47.5 Billion
ODA
Proposal phase
Bohol
Cebu (Santander)
Cebu and
20 Billion
ODA
RDC resolution was
Negros Oriental (Sibulan Negros Oriental
transmitted to DPWH
or Amlan) Bridge
CO
Bohol (Ubay) Leyte
Bohol and Leyte 130 Billion
ODA
Proposal phase
(Maasin) Bridge
UrbanVisayas
AGT Type
Rail
Cebu
Billion
ODA
Proposal
phase
Sources:
Spatial
Development
Framework 35
(VSDF),
TRIP, Regional
CIP & Metro Cebu
Roadmap
System
Study

Project Title
Metro Cebu Transport
Master Plan
Inter-City Rail System
Metro Cebu Outer
Circumferential Road

Cebu North Coastal

Road
Second Cebu South
Road

Location
na

Cost PhP
na

Funding
Source
ODA

Status
TOR is being
finalized by DOTC
Cebu
27 Billion
ODA
Proposal phase
Naga City to 15.7
ODA
DPWH7 has a
Danao City, Billion
Feasibility Study
Cebu
for the Naga City
to Danao City
being reviewed by
DPWH CO
Consolacion 1.200
General
Initial civil works
Liloan, Cebu Billion
Appropriations had already been
Act
done.
Talisay7.98
ODA
Feasibility Study is
MinglanillaBillion
included in the
Naga-San
DPWH second
FernandoEngineering
Carcar, Cebu
District PAPs for
Fiscal Year 2017

Sources: Visayas Spatial Development Framework (VSDF), TRIP, Regional CIP & Metro Cebu Roadmap
Study

Region VII Major Transport Projects

Project

San CarlosDumaguete Road,

N. Oriental
Second Runway
Construction
Cebu City-Bogo
Road, Cebu
GuihulnganIsabela-Binalbagan
Road
Negros
Oriental

Agenc
y

Output

Construction/improvement of
DPWH 126.79 km of road
MCIAA
DPWH

Construction of 67.93 km road

Construction/ improvement of
DPWH 67.66 km of road

Province

Project
Cost
(PhP Bn)

Status

Negros
Oriental

2.14 Bn

Ongoin
g

Cebu

6.24 Bn

Propose
d

Cebu

2.23 Bn

Ongoin
g

Negros
Oriental

1.75 Bn

Propose
d

Region VII Major Transport Projects

Project

Agenc
y

Output

Province

Project
Cost
(PhP Bn)

Status

Loay Interior
Roads

DPWH Rehabilitation of 78.85 km road

Bohol

2.02 Bn

Propose
d

Bohol Coastal
Circumferential
Road , Phase III,
Bohol

DPWH Construction of 86.35 km road

Bohol

2.34 Bn

Propose
d

Dumaguete
Airport

DOTC

Negros
Oriental

7.01 Bn

Propose
d

1,848m x 45m runway

overlayed by 4"asphalt

Philippine Macroeconomic Projections,

Transport Direction, and Regional Developments

Emmanuel F. Esguerra
Socioeconomic Planning Secretary

PISFA and Portcalls Shipping Conference

Cebu City
28 April 2016