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The Philippine Economy: Progress, Challenges, Strategies by Secretary Arsenio M. Balisacan

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Socioeconomic Planning Secretary and NEDA Director General Arsenio M. Balisacan's statement during the press briefing in Malacañang on February 17, 2014 on the Philippine economy and poverty reduction roadmap.

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The Philippine Economy: Progress, Challenges, Strategies by Secretary Arsenio M. Balisacan

  1. 1. The Philippine Economy: Progress, Challenges, Strategies ARSENIO M. BALISACAN Secretary of Socioeconomic Planning Malacañan Palace, 17 February 2014 17-Feb-14 1
  2. 2. The Philippine economy has been growing robustly… 8,000,000 Real GDP at 2000 prices (Millions Php) Trend (HP Filter) 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Source: Philippine Statistics Authority and National Economic and Development Authority
  3. 3. Strong macroeconomic fundamentals supported this remarkable performance. Favorable interest rate and sound banking system Low and Stable inflation 9.0 8.0 7.0 6.0 5.0 4.0 3.0 2.0 10 Headline Inflation 25 NPL Ratio, LHS* 8 Low-end Target 20 6 Real interest rates, RHS** 15 4 High-end Target CAR, RHS*** 10 2 2005 2006 2007 2008 2009 2010 2011 2012 2013 5 0 0 2005 Note: High and low-end targets are based on the BSP publication on Inflation Targeting dated September 2013; Actual inflation figures are based on the 2006 CPI series. 2006 2007 2008 2009 2010 2011 2012 2013 * end-November 2013, **Jan-Nov 2013, *** end-June 2013 Sustainable fiscal and external position 80.00 0.00 60.00 60.0 -1.00 4.8 -2.00 20.00 -3.00 20.0 4.5 3.1 Fiscal Balance to GDP (RHS) * Fiscal balance to GDP as of September 2013; NG Debt to GDP as of November 44.1 37.1 31.3 2005 NG Debt to GDP (LHS) 4.0 2.8 2.1 1.9 52.7 -4.00 2005 2006 2007 2008 2009 2010 2011 2012 2013* 4.6 40.0 40.00 0.00 6.0 5.6 4.4 2006 2007 2008 2.0 32.6 30.1 27 2009 2010 2011 24.1 21.9 0.0 0.0 External Debt to GDP Ratio (LHS) * 2013 data is for the period Jan-Sep 2012 2013* Current Account to GDP Ratio (RHS)
  4. 4. The government has considerable fiscal space for making investments to catalyze private ventures, provide public goods and fund social programs National Government’s Sectoral Spending (% of GDP) 7.0 6.0 5.0 4.0 3.0 2.0 1.0 1986 1988 Health 1990 1992 1994 1996 1998 Education, Culture and Manpower Development 2000 2002 2004 Interest Payment Source: Department of Budget and Management and Philippine Statistics Authority 2006 2008 2010 2012 Infrastructure and Other Capital Outlay 2014
  5. 5. We are on track with respect to our economic targets. But we lag with respect to our desired social outcomes. PDP 2011-2016 Targets 7-8% Gross Domestic Product 22% Investment/GDP ratio 6.8-7.2% Unemployment Rate Poverty Incidence down to 16.6% Where are we now? 6.8% (2012) 7.2% (2013) Real GDP Growth 20.3% (2012) 21.1% (2013) Fixed Capital as ratio to GDP Unemployment rate 7.0% (2012) 7.1% (2013) Underemployment rate 20.0% (2012) 19.3% (2013) 26.3% (2009) 25.2% (2012) Poverty Rate
  6. 6. Lessons Learned: Midterm Assessment of PDP 2011-2016 • Good governance has proven to be an effective platform upon which 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. 6
  7. 7. GDP Growth Targets for 2014-2016 Annual Plan Targets Baseline (2012) 2014 2015 2016 6.8 6.5 -7.5 7.0-8.0 7.5-8.5 GVA in agriculture, hunting, fishery and forestry 2.8 (0.9)-0.1 2.0-3.0 2.5-3.5 GVA in industry 6.8 9.8-11.0 8.6-9.7 9.3-10.3 GVA in services 7.6 6.0-6.9 6.8-7.8 7.2-8.1 Indicator Gross Domestic Product (%)
  8. 8. Employment Target for 2014-2016 Annual Plan targets Baseline (2012) 2014 2015 2016 Unemployment rate (in %) 7.0 6.7 - 6.9 6.6 - 6.8 6.5 - 6.7 Underemployment rate(% of employed) 20.0 19.0 18.0 17.0 Indicators a/ cannot be computed due to changes in industry classifications. In January 2012, the Philippine Statistics Authority (PSA) started to adopt the 2009 Philippine Standard Industrial Classification (PSIC)for the industry codes. Prior to this, the PSA used the 1994 PSIC.
  9. 9. Poverty Incidence Target for 2014-2016 Indicator Poverty Incidence (% of population) Multidimensional Poverty (% of population) Baseline (2012) 25.2 Annual Plan Targets 2014 2015 2016 23.0-25.0 20.0-23.0 18.0-20.0 28.2 (2008) 20.0-22.0 18.0-20.0 16.0-18.0
  10. 10. Competitiveness of productive sectors
  11. 11. Major infrastructure projects to improve connectivity between urban centers and regional growth hubs
  12. 12. Category 1: Provinces with the most number of poor households • Growth opportunities may be present but the poor cannot participate in the growth process • In-migration; provinces attract the poor from other places but are unable to get jobs due to lack of skills
  13. 13. Category 1: Provinces with the most number of poor households PROVINCE REGION NO. OF POOR HOUSEHOLDS 1) Zamboanga del Sur Western Mindanao 170,181 2) Cebu Central Visayas 151,425 3) Pangasinan Ilocos 148,601 4) Negros Occidental Western Visayas 138,664 5) Camarines Sur Bicol 136,208 6) Leyte Eastern Visayas 132,377 7) Iloilo Western Visayas 122,770 8) Sulu ARMM 122,218 9) Quezon CALABARZON 122,139 10) Davao del Sur Davao Region 111,655 Strategy: • Promote higher growth to create more employment opportunities • Upgrade skill sets of the poor, undertake more aggressive employment facilitation • Begin with growth sectors: ITBPM, tourism, manufacturing, and logistics
  14. 14. Category 2: Provinces where the proportion of poor households is high • Limited opportunities for rapid growth • Small population, low density, remote areas • Weather-related events and armed conflict
  15. 15. Category 2: Provinces where the proportion of poor households is high PROVINCE REGION Poverty Incidence (%) Lanao del Sur ARMM 73.8 Maguindanao ARMM 63.7 Eastern Samar Eastern Visatas 63.7 Apayao Cordillera 61.4 Zamboanga del Norte Western Mindanao 54.4 Camiguin Northern Mindanao 53.6 Saranggani SOCCSKSARGEN 53.2 North Cotabato SOCCSKSARGEN 52.4 Masbate Bicol 51.3 Northern Samar Eastern Visayas 50.2 Strategy: • Social assistance programs while economic opportunities are being created • Programs that promote economic and physical mobility • Peace-building efforts
  16. 16. Category 3. Provinces prone to multiple hazards LIST OF PROVINCES Abra Agusan del Sur Albay Antique Aurora Benguet Bohol Cagayan Catanduanes Cavite Dinagat Islands Eastern Samar Ilocos Norte Ilocos Sur Iloilo Isabela Laguna Leyte Northern Samar Nueva Vizcaya Pampanga Quezon Quirino Rizal Southern Leyte Surigao del Norte Surigao del Sur Zambales Zamboanga del Sur Zamboanga Sibugay Marginally non-poor can slide into poverty due to shocks or disasters; poor can slide deeper to poverty Strategy: • Risk reduction and mitigation • Social insurance and social protection • Income diversification
  17. 17. Plan Implementation • Convergence of different government agencies • Role of the private sector, business, development partners • Implementation will be monitored by a NEDA committee or Cabinet cluster • NEDA Secretariat will produce annual reports on progress/accomplishment
  18. 18. 17-Feb-14 18
  19. 19. Salamat at mabuhay tayong lahat. 17-Feb-14 19

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