The document summarizes recent economic performance in the Philippines and provides an outlook for 2003-2004. It reports that GDP growth was 4.4% in Q3 2003, with services growing at 5.6% and industry at 2.3%. Exports increased by 0.0% in Q3 while imports grew by 2.6%. The outlook predicts GDP growth of 4.2% in 2003 and 4.5-5.5% in 2004, driven by expected increases in exports, OFW remittances, and election spending in the first half of 2003. Risks include higher oil prices and uncertainty after the change in leadership.

1. Recent Economic Performance and Prospects for 2003-2004 Year-End 2003 Media Briefing Five Storey Building, BSP Complex December 22, 2003 Presented By Romulo L. Neri Secretary of Socio-Economic Planning

3. Economic Performance (Growth rates, in percent) 25.6 5.7 4.3 1 st -3 rd Qtr 28.4 35.7 13.3 -6.2 NFIA 5.9 6.0 5.1 3.1 GNP 4.4 4.0 4.5 3.8 GDP Q3 Q2 Q1 Q3 2003 2002

4. Asian GDP (Q3 2003, growth rate in %)

5. Major Industries (Growth rates, in percent) 5.6 3.1 3.3 1 st -3 rd Qtr 5.6 5.6 5.5 5.0 Services 2.3 3.1 4.1 4.4 Industry 5.5 1.6 2.9 -0.4 AFF Q3 Q2 Q1 2003 2002 Q3

6. Agriculture, Fishery & Forestry (Growth rates, in percent) 1.4 6.5 -1.1 -2.8 Other crops 0.0 0.9 2.5 5.2 Banana 2.6 3.1 5.1 8.5 Poultry 3.3 2.6 3.8 4.6 Livestock 4.7 5.5 0.4 5.4 Fishery -5.4 -16.0 22.1 -5.6 Corn 20.4 -10.3 -0.7 -16.0 Palay 5.5 1.6 2.9 -0.4 AFF 313.3 -41.0 -51.1 -43.7 Forestry -19.3 22.2 18.9 -43.5 Sugarcane 1.8 0.5 2.1 10.4 Coconut/copra Q3 Q2 Q1 Q3 2003 2002

7. Industry (Growth rates, in percent) 4.4 4.6 5.3 2.7 Manufacturing 17.8 26.7 13.9 60.9 Mining & Quarrying 2.3 3.1 4.1 4.4 Industry 3.0 3.1 2.9 4.1 Utilities -10.7 -9.5 -3.6 3.0 Construction Q3 Q2 Q1 Q3 2003 2002

8. Gainers in Manufacturing (Growth rates, in percent) 3.5 -13.5 -7.1 29.1 Electrical Machinery 16.3 5.3 1.1 -13.4 Miscellaneous 40.3 33.5 10.9 -26.8 Machinery except electrical 15.3 50.9 12.4 2.0 Wood and Cork 9.1 12.4 1.5 7.3 Textile 2.5 7.3 12.1 1.6 Food manufactures 15.5 19.6 3.8 -9.4 Products of petroleum and coal 120.9 45.9 93.0 -6.0 Basic metal 1.5 4.2 5.1 2.3 Publishing and Printing 4.6 8.2 4.7 -10.5 Paper and paper products 4.4 3.0 3.0 -4.6 Furniture and Fixtures 3.2 7.8 -2.5 -7.8 Chemical and Chemical products Q3 Q2 Q1 Q3 2003 2002

9. Losers in Manufacturing (Growth rates, in percent) -2.4 16.5 6.3 8.9 Footwear/Wearing apparel -52.5 -59.0 -47.1 22.5 Tobacco -3.9 1.5 6.6 7.8 Beverage -14.0 -14.0 5.8 -10.3 Transport equipment -9.0 -2.0 -15.5 13.4 Non-metallic minerals -0.5 -1.9 3.3 -1.2 Rubber products -37.8 6.6 -4.9 2.3 Leather and leather products -17.8 -13.2 0.8 8.5 Metal industries Q3 Q2 Q1 2003 2002 Q3

10. Services (Growth rates, in percent) 4.0 4.1 3.2 2.1 O. Dwelling & R. Estate 4.9 4.9 5.4 5.6 Private Services 5.8 1.5 3.3 5.3 Government Services 5.0 5.4 5.6 4.6 Trade 7.9 8.4 8.6 7.4 Transport., Comm., & Storage 5.6 5.6 5.5 5.0 Service Sector 6.5 8.6 5.5 4.4 Finance Q3 Q2 Q1 2003 2002 Q3

11. Demand (Growth rates, in percent) 2.6 6.4 24.0 5.0 Imports 7.7 2.7 17.4 -4.0 Gross Domestic Capital Formation -0.6 -12.0 -1.5 3.6 Government Consumption 4.9 5.1 4.9 4.3 Personal Consumption 0.0 1.2 3.6 8.1 Exports Q3 Q2 Q1 Q3 2003 2002

12. Capital Formation (Growth rates, in percent) 19.8 6.0 9.0 6.2 Durable Equipment 4.2 3.5 2.1 3.7 Breeding Stocks -23.0 -21.3 -11.7 2.9 Public -11.7 -9.8 -2.2 5.9 Construction 7.7 2.7 17.4 -4.0 Capital Formation 140.9 71.0 385.5 -183.6 Changes in Stocks 2.1 2.7 10.1 9.6 Private Q3 Q2 Q1 2003 2002 Q3

13. Durable Equipment (Growth rates, in percent) 19.8 6.0 9.0 6.2 Durable Equipment 7.7 -0.6 2.7 3.0 Specialized Industries 34.2 49.1 7.0 26.8 Agricultural mach. 29.8 32.2 -2.2 18.3 Tractor other than steam 228.6 500.0 -53.8 133.3 Sugarmill mach 101.2 74.1 7.4 -15.0 Pulp & paper mach 48.9 2.9 14.1 -63.1 Metal working mach 201.0 156.0 41.2 10.5 Water transport 155.6 797.6 - 28.6 Railway transport -7.9 18.0 9.9 -21.9 Transport Equipment 35.7 13.4 24.3 -5.7 Other general industrial mach. 33.9 -12.4 -10.4 216.8 Other electrical mach. & apparatus 24.8 1.5 11.7 21.0 Industrial Machinery and Equipment Q3 Q2 Q1 2003 2002 Q3

14. II. Outlook for 2003-2004

15. 2003-2004 Macroeconomic Environment *As of June 12, 2003 DBCC meeting 10.0 2.0 1.0 (Jan-Oct) 9.5 Exports (%) DBCC Assumptions* -4.7 15.0 1.2 8.0-9.0 4.5-5.5* 26.10 52.0-54.0 FY 2003 -4.2 16.0 1.6 7.5-8.5 4.0-5.0* 23.86 53.0-54.0 FY 2004 -4.6 (Jan-Sep) -5.2 NG Fiscal Balance (as % of GDP) 16.18 1.90 5.432 3.1 24.33 51.60 Actual FY 2002 16.80 (end-Nov) Gross International Reserves (US$bn) 1.2 (Jan-Nov) LIBOR rate, 6 months 6.0 (Jan-Nov) 91 Treasury Bill (%) 3.1 (Jan-Nov) Inflation rate target (%) 27.66 (Jan-Nov) Dubai oil price (US$/Barrel) 54.09 (Jan-Nov) P:$ rate (PhP) Latest Actual 2003

18. Early Indicators for Q4 2003 * As per DOF press releases dated Oct. 20 & Nov. 19 31.0 (Oct) -8.7 NG Capital Outlays* 11.0 (Oct) 5.1 OFW Remittance 7.8 (Oct) 0.5 Appliance Sales -12.0 (Oct-Nov) 14.0 Automobile Sales 30.2 (Q4 Forecast) 0.9 DA-BAS Corn Production 11.3 (Oct) -7.97 Tourist Arrivals 3.0 (Oct) 5.6 Meralco (Commercial) -5.5 (Oct) 4.2 Meralco (Industrial) 1.2 (Q4 Forecast) 1.6 DA-BAS Palay Production Latest Q1-Q3 Growth rates, in %

19. Early Indicators for Q4 2003 5.8 (Oct) 6.3 -0.6 -3.3 Manufactures o.w. Electronics Products 6.2 (Oct) 5.1 (Oct) Imports (US$) 10.3 (Oct) 19.7 Mineral Products 18.0 (Oct) 7.2 (Oct) 5.2 (Oct) -9.2 (Oct) -19.7 (Oct) 11.0 3.7 -4.0 20.4 10.6 Capital Goods o.w. Electronics Products Raw Materials & Interm. Goods Mineral Fuel & Lubricants Consumer Goods 6.2 (Oct) 1.0 Exports (US$) 7.6 (Oct) 16.8 Total Agro-based Products 0.2 (Oct) 60.8 Petroleum Products Q4 Q1-Q3 Growth rates, in %

20. Early Indicators for Q4 2003 Jan-Oct 30,062 30,627 30,251 31,524 Employment Level (‘000) Employment by class of workers (g.r., in %) 15.3 10.2 -2.3 3.5 -0.9 120 -13 58 165 Oct ‘02 15.7 10.1 -6.0 0.5 10.0 633 272 364 1,273 Oct ‘03 Underemployment rate Unemployment rate Unpaid family workers Own-account workers Wage and salary workers Services Industry Agriculture Jobs generated (‘000) 2002 2003 1.5 4.8 4.3 0.8 5.7 -5.8 17.0 17.0 907 566 11.4 11.4 653 -18 272 144 341 81

21. 2003-04 Growth Forecast 3.4 3.7 AFF 3.2 2.4-3.0 Industry 5.3 4.9-5.5 Services FY 2003 Q4 2003 Forecast 14.1 3.8-4.0 4.5-4.8 4.2 GDP 22.0 5.4 NFIA GNP

22. Growth Forecasts: Supply Side 5.2-6.0 5.4 GNP 4.9-5.8 4.2 GDP 3.7-4.7 3.4 Agriculture 5.0-5.8 3.2 Industry 7.1-8.0 20.0 Mining & Quarrying 4.6-5.5 5.0 Manufacturing 7.3-7.8 -8.4 Construction 3.0 Emerging FY 2003 3.3-4.2 2004 Forecast Elect, Gas & Water

23. Growth Forecasts: Supply Side 5.7-6.6 5.4 Trade 9.0-9.9 8.5 Trans, Comm & Storage 3.2-4.1 3.0 O. Dwellings & Real Estate 5.7-6.4 6.2 Finance 5.1-6.0 5.0 Private Services 5.5 - 6.3 5.3 Service 1.4 Emerging FY 2003 1.3-2.2 2004 Forecast Government Services

24. Growth Forecasts: Demand Side 3.5-4.5 1.4 Exports 7.1-8.1 6.6 Imports 7.7-8.3 -10.4 of which: Total Construction 6.8-7.4 0.4 Investments 6.2-7.1 -1.7 Government Consumption 5.0 Emerging FY 2003 4.5-5.3 2004 Forecast Private Consumption

25. Thank you.