Highlights of the Philippines’ Economic Performance in 2013
Economic Performance and International Recognition
- In 2013, the Philippines made large economic strides, most notably in achieving Investment-grade status. All three major global credit-rating agencies – Standard & Poor’s Fitch Ratings, and Moody’s Investors Service – now view the Philippines as credit worthy.
- The Philippines moved up in the World Competitiveness Yearbook, now ranking 38th out of 60 countries - its best performance since 2009. On the other hand, the country also moved up 6 notches in the Global Competitiveness Index of the World Economic Forum, with a ranking of 59 out of 148 countries.
- The Philippines ranks 108th (out of 189 countries) in the overall “Ease of Doing Business” table of the 2014 Ease of Doing Business Report of the World Bank. The report also summarizes the Philippines’ performance in key indicators (e.g. starting a Business, Dealing with Construction Permits, Paying Taxes) and benchmark against regional and high-income economy (OECD) averages.
The Securities and Exchange Commission shared that as a member of the inter-agency Task Force on Ease of Doing Business to ensure the implementation of the Gameplan for Competitiveness and to improve the Philippines’ ranking; SEC is particularly involved in improving the ranking on Starting a Business and Protecting Investors. SEC established the Green Lane Unit to shorten the registration period for corporation and partnerships from three days to one day. The SEC also entered into an agreement with the Bureau of Internal Revenue (BIR) for the issuance of pre-generated Tax Identification Number (TIN) to corporations and partnerships upon registration with the SEC.
- The heritage Foundation released the 2014 Index of Economic Freedom where the Philippines jumped eight notches from 97th in 2013 to 89th out of 178 countries this 2014. With an overall score of 60.1 points, the Philippines ranks as a “moderately free” country.
The report notes the Philippines’ improvements in seven of the ten economic freedoms, particularly in: Investment freedom, business freedom, monetary freedom, government spending, and freedom from corruption. The Philippines ranks 16th out of 42 countries in the Asia – Pacific region.
The index rates countries in 10 categories – labor freedom, business, trade freedom, fiscal freedom, government spending, monetary freedom from corruption – and the results are average to create an overall score. (Source: http://www.heritage.org/index/country/philippines)
- Highlights from the Opening Remarks of Bangko Sentral ng Pilipinas Governor Amando Tetango, Jr. Delivered at the Philippine Economic Briefing on 17 September 2013.
- Since 2011, the economy has stayed on the path of strong growth and low inflation. In 2013, the economy outperformed on both metrics, growth above the government’s target range of 5-6 percent, with inflation registering at below the 3-5 percent target.
- The World Bank has dubbed the Philippines as “the rising tiger of Asia.” The Institute of Chartered Accountants in England and Wales has adjudged the Philippines as one of the “brightest sparks in the ASEAN region.” And, the World Economic Forum has also upgraded the country’s global competitiveness ranking by 1 places from our 2011 – 2012 spot of 75th to rank 59th out of 144 economies in the WEF’s 2013 -2014 Global Competitiveness Report.
- The economy’s growth rate of 7.5 percent in Q2 2013 is the fourth consecutive quarter of more than 7 percent growth and the 58th quarter of uninterrupted positive growth. Our growth is the highest among ASEAN economies and is one of the highest in ASIA and among emerging market economies.
- The laudable economic performance and the international recognition have translated to palpable gains:
- The government’s borrowing costs from international and domestic financial markets have gone down… helping create added fiscal space for economic and social spending priorities.
- The lower borrowing rates for the NG have translated to lower borrowing costs for the business sector since the cost of private borrowing is generally priced-off of the yields on government securities.
- To the extent that investment-grade Philippine sovereign debt instruments now require less capital buffers under the Basel 3 Capital framework, more bank resources are now available for lending in support of the country’s broad-based growth objective.
- The Philippine gross domestic product (GDP) grew 7% in the quarter of 2013, after posting 7.65% growth in the first half, much higher than the government’s full-year target of 6% to 7%. The government has set a GDP target of 6.5% to 7.5% for 2014.
- According to the World Bank 2014 Global Economic prospects report, the Philippine economy is expected to post growth above 6% until 2016. The report further projects that the Philippines will grow 6.5% in 2016, when the Aquino administration ends its term. Growth is seen hitting 7.1% in 2015, 6.5% in 2014 and 6.9% in 2013.
- Investor confidence soared in 2013 on the back of perceived significant improvements on governance, intensified drive against corruption, the country’s favorable and robust economic performance, as well as the ratings upgrade granted by credit-rating firms. Such developments were reflected in the numbers, whether in terms of a rise in the investment pledges of both local and foreign firms, the number of trade missions pouring in the country, and the significant jump in rankings in the various global competitiveness surveys released in 2013. (http://business.inquirer.net/159497/2013-banner-year-for-trade-investment-says-dti#ixzz2r05rUz1l)
- The country posted a surplus in its foreign income position for the ninth consecutive year in 2013 amid the continued growth of remittance from migrant workers and increased revenue from tourism and the business process outsourcing (BPO) sector. Documents from the Bangko Sentral ng Pilipinas (BSP) showed that the Philippines posted a balance-of-payments (BOP) surplus of $5.085 billion last year.
- The National Statistics Office reports that for the sixth consecutive month since June 2013, merchandise exports showed positive growth – expanding by 18.9 percent in November 2013 to 4.3 billion US dollars from 3.6 billion US dollars in November 2012. Registered Higher exports in petroleum, minerals and forest products, as well as total agro-based products (such as fish products, centrifugal and refined sugar, desiccated coconut, and bananas).
- The Department of Tourism (DOT) reports that the Januar-to September 2013 tourism receipts reached $3.08 billion (P139 billion), which is already 68 percent of the full-year target of $4.6 billion (P205 billion). The Philippines however was unable to reach its 5.5 million visitor-arrival target for 2013.
DOT, however, has projected that the tourism industry will contribute at least 10 percent to the economy by 2016, exceeding the 8.1 percent contribution to the GDP target set by the National Tourism Development Plan (NTDP) for 2010-2016.
Under the NTDP, the DOT is targeting 10 million foreign-visitor arrivals by 2016, staying an average of 9.2 nights, and spending an average of P4, 383 (or $97) per day. DOT aims to increase direct employment in the tourism industry to 6.8 million people in 2016, to account for 17 percent of total employment.
DOT Secretary Ramon Jimenez notes that the recent lifting of the EU travel ban to the Philippines, and the upgrade to Category 1 status from the US Federal Aviation Authority this 2014 will help the Philippines reach its tourism targets. (Source: Interview of DOT Secretary Ramon Jimenez with Business Mirror)
- The Department of Trade and Industry (DTI) is spearheading the development of the Philippine aerospace industry, with the forecast of 7 to 8 percent industry growth coming from the ASEAN region. DTI notes that the Philippines’ entry point will be in the area of maintenance, repair and operation (MRO) with the existing presence of Lufthansa Technik, Singapore Airlines and Philippine Airlines.”
- In the “Emerging Trends in Real Estate Asia Pacific 2014” report issued by the Urban Land Institute and PricewaterhouseCoopers has ranked Manila 4th in the real-estate investment market in the region. Manila joins Tokyo, Shanghai, Jakarta and Sydney as the top 5 most attractive destination on property investment.
Typhoon Yolanda Rehabilitation Efforts
- The National Economic and Development Authority (NEDA) reported that the total damage and loss from Typhoon Yolanda has been initially estimated at Php571.1 billion. This includes physical assets, reductions in production, sales and incme as well as the value of increased operating costs resulting from the disaster. About 90 percent of the total damage and loss has fallen on the private sector sector with the remaining 10 percent on the public sector:
- Infrastructure – Php33.98B
- Agriculture – Php62.11B
- Industry and Service – Php116 B
- Education – Php23.9 B
- Health – Php5.57 B
- Housing – Php325.24 B
- Local Government – Php4.3 B
- NEDA reported that the Yolanda recovery and reconstruction will require a total of Php361 billion in investments. This amount will be distributed over four years, in line with a phased cumulative and flexible implementation of the Reconstruction Assistance on Yolanda (RAY) Plan.
- Shelter and Resettlement – Php183.3 B
- Public Infrastructure – Php28.4 B
- Education and Health Services – Php37.4 B
- Agriculture – Php18.7 B
- Industry and Services – Php70.6 B
- Local Government – Php4 B
- Social Protection – Php18.4 B
- The Reconstruction Assistance on Yolanda (RAY) is the Government’s strategic plan to guide the recovery and reconstruction of the economy, lives, and livelihoods in the affected areas. The objective of the plan is to restore the economic and social conditions of these areas at the very least to their pre-typhoon levels and to a higher level of disaster resilience.
- Immediate actions include assessment of damage to infrastructure and preparation of more resilient design standards for infrastructure projects. These include the rehabilitation and construction of critical infrastructure such as housing, roads and bridges, hospitals, provincial, city and municipal halls, seaports and airports, public markets, water supply and distribution systems, irrigation systems, power, telecommunications as well as other government offices and facilities.
- A copy of Reconstruction Assistance n Yolanda may be accessed through: http://www.neda.gov.ph/wp-content/uploads/2013/12/RAZ-DOC-FINAL.pdf