Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
PHILIPPINES 2009-2013 GROWTH PROJECTIONS FOR PROJECT LINK National Economic and Development Authority September 25, 2009 From a slower GDP growth of 3.8 percent in 2008, the Philippine economy is expected to decelerate further in 2009 due to the impact of the global crisis. However, while the growth in the first half of 2009 was at 1.0 percent, growth for the full year is expected to be between 1.0 and 2.0 percent as the slump in global economic conditions is starting to ease. Gross national product is expected to register 3.2-4.2 percent growth due to a possible 21.5-22.6 percent growth in net factor income from abroad (NFIA) Supply Side The agriculture sector is seen to grow by 1.6-2.2 percent. In the first semester of 2009, the sector grew only by 1.3 percent due to subdued production in rice and the contraction in corn and sugar. In the second half, the sector is expected to benefit from declining fertilizer prices and continued support from the government. However, some risk is expected with the onset of the El Niño drought, which is seen to hit the country in the latter part of the year. Meanwhile, the industry sector is forecast to contract by 1.5 percent or at most register flat growth. This is mainly due to the manufacturing subsector, which is adversely affected by weak external and domestic demand. The contraction in the manufacturing subsector will be slightly offset by robust growth in construction, attributed mainly to strong government spending on infrastructure as part of the fiscal stimulus program. Another significant source of growth is mining and quarrying, which is projected to increase due to the upward trend in metal prices in the world market. The utilities subsector is expected to post slower growth due to the decline in economic activity. The services sector will continue to lead growth in 2009, albeit at a slower pace of 2.4-3.2 percent. Growth in the sector will be primarily attributed to trade which will gain from the improvement in the general economic outlook, the higher level of consumer confidence, the continued growth in migrant Filipino remittances, and easing inflation in the second half. The transportation, communications and storage subsector will also provide a push, especially from air transport and communications. The air transportation industry will continue to attract more travelers, especially domestic, on offers of cheaper cost of transportation, while communications will benefit from more innovations due to stiff competition. Another source of growth is private services, primarily due to personal services and tourism, especially healthcare/medical tourism. Business process outsourcing (BPO) is expected to maintain high growth since demand for BPO services remains strong. The government services subsector is seen to grow strongly with the continued implementation of the fiscal stimulus program and election-related spending. Demand Side With the improvement in consumer confidence and lower inflation, growth in personal consumption expenditures is expected to improve in the second half, resulting in a 1.8-2.7 percent growth rate for the full year. The expectations-defying growth in remittances and the start of election-related spending in the latter part of the year, will also boost private 1 consumption. Government consumption is seen to remain strong with the continued implementation of measures to stimulate the economy and government spending in preparation for the 2010 elections. Gross domestic capital formation will contract by 4.5 to 2.7 percent mainly because of lower investments in durable equipment and weak private construction. The adverse effects of pessimism and uncertainties on private investment will offset the expected strong growth in public construction. Prospects for merchandise exports and imports are still negative due to the global economic slump. Exports of services, however, are projected to perform well due to outsourcing. Outlook for 2010 to 2013 GDP is expected to grow by 2.7-3.7 in 2010, 3.8-4.7 percent in 2011, 4.8-5.7 percent in 2012 and 5.8-6.7 percent in 2013, while GNP is seen to range between 5.1-6.0 percent in 2010, 6.4-7.3 percent in 2011, 5.8-6.6 percent in 2012 and 6.5-7.4 percent in 2013. A gradual recovery is projected for 2010. This outlook banks on appropriate, effective, and timely implementation of fiscal and monetary stimulus packages in the country. That is, government will not end the stimulus efforts anytime soon, as it awaits firm signs of a broadbased and sustainable upturn. Then will it address the negative side effects of expansionary fiscal and monetary policies. This growth also needs the support from the private sector, and the sustained recovery in advanced economies and other major trading partners. A full economic rebound is expected in 2011, leading to continually strong high growth in 2012-2013. The Philippines will start reaping the gains from previous measures to improve competitiveness: infrastructure development; improved governance, bureaucracy, and transparency; streamlined processes and less costly transactions in doing business; cheaper power and logistics costs; minimized political noise; and improved peace and order. Agriculture will grow faster due to lower fertilizer costs, increased government funds to support the sector, and adaptation measures to climate change. Growth will also be boosted as the country ventures into the global halal markets. Industry is seen to rebound with the recovery of the manufacturing subsector, due to continued improvements in the global and local economies, the pick-up in international trade, and the expected better performance of agriculture attributed to opportunities in the halal industry. Improved competitiveness is expected to result in a more productive and efficient manufacturing subsector. Mining and quarrying is a key growth area, with the country among the top 10 mineral producers in the world. Expectations of higher growth for the medium term will likely lead to an increase in utilities production. Construction will likely slow down on the public sector side, as the government successfully accomplishes its infrastructure development program. Services will continue to drive growth due to greater economic activities, continually strong inflows of migrant remittances, and greater business and consumer confidence. Finance will accelerate as the stock market recovers, as financial services continue to improve, and as the capital market develops. Transportation, communications and storage will benefit from the pick-up in international trade, strong tourism, more innovations in communications, the 2 deregulation of the air transport industry, and air transport agreements that open up new routes. Growth of private services will be enhanced by the robust growth in the offshoring and outsourcing industry and higher momentum in tourism. The wholesale and retail trade sector expects brighter prospects as the general economic outlook improves and consumer spending picks up. A moderate improvement in the growth of ownership of dwellings and real estate is seen for 2010 after its boom in the previous years. This is expected to gain momentum in the medium term due to business expansion and still high housing demand. The government services subsector is seen to surge in 2010 with the holding of the national elections and the expansion of government programs on social protection and poverty alleviation. In 2010, private consumption expenditure is expected to hold fairly well with lesser consumer fears, the spending effects of the election, and increased levels of migrant remittances. Government consumption will likewise increase with the planned expansion of the hunger mitigation projects and the conditional cash transfer program, as well as government spending for the elections. But this will slow down in the succeeding years as part of the government’s effort to keep the budget deficit from ballooning. Recovery in investments is expected to kick-in by 2010 as investor confidence improves in an environment of low inflation and interest rates and relatively stable exchange rates. However, the primary downside are the uncertainties brought by the election as capital accumulation tends to decline prior to and after the polls. Capitalizing on the projected gradual recovery of the export and manufacturing sector, investments in capital goods is seen to increase. Investments in renewable energy are expected to surge, specifically wind, bio-energy and hydropower. The office property sector is projected to post moderate growth in the near term, as outsourcing firms remain conservative about their expansion plans. (However, this could be compensated by demand for low-cost housing, supported by favorable housing interest rates, easing prices of construction materials, and the foreseen rebound of the migrant family market.) In 2010, the government budget will prioritize the completion of on-going and nearly completed construction and will not favor new construction. The government will continue the emphasis on infrastructure but it will shift to large-scale projects, tapping resources from official development assistance and encouraging joint ventures and publicprivate partnerships. Exports are expected to recover in 2010 with higher demand for semiconductors. A boost in exports is also seen from other products like agricultural goods, as the country actively pursues diversification of its market and product portfolio. 3 Philippine Economic Growth, 2008-2013 (In percent) 2009 3.2-4.2 1.0-2.0 Forecasts 2010 2011 5.1-6.0 6.4-7.3 2.7-3.7 3.8-4.7 2012 5.8-6.6 4.8-5.7 2013 6.5-7.4 5.8-6.7 3.2 5.0 3.3 1.6-2.2 -1.5-0.0 2.4-3.2 2.1-3.1 2.8-3.7 2.9-3.9 2.9-3.9 3.5-4.4 4.3-5.2 3.1-4.1 4.2-5.2 5.7-6.6 3.5-4.5 5.6-6.6 6.6-7.5 4.7 1.8-2.7 3.8-4.5 4.4-5.1 4.6-5.3 4.9-5.6 Consumption Government 3.2 5.3-6.1 1.2-1.7 1.1-1.6 2.6-3.1 2.1-2.7 Consumption Investments Exports Imports 1.7 -1.9 2.4 -4.5 to -2.7 -12.4 to -11.4 -12.4 to -11.4 4.1-4.8 4.4-5.4 8.2-9.2 3.8-4.7 7.1-8.1 8.9-9.9 3.9-4.7 8.6-9.6 8.2-9.2 7.6-8.5 9.4-10.4 8.2-9.2 GNP GDP Production Agriculture Industry Services Expenditure Private Actual 2008 6.2 3.8 4