PH ECONOMIC FAST TRAIN-- BACK ON TRACK... OR DERAILED

Transcription

1 PH ECONOMIC FAST TRAIN-- BACK ON TRACK... OR DERAILED FMIC ECONOMIC BRIEFING January 9, 2015 Victor A. Abola, Ph.D. To Repair Bay Fast Track

2 Domestic Demand-led Growth Slowdown in 2014-to Q3 Can PH Get Back into Fast Track in Q4, 2015? Domestic Demand Outlook External Demand Outlook Macroeconomic Forecasts Summary.

3 Robust Domestic Demand But this has slowed down Faster pace of inflation Typhoon Yolanda s Impact on Productive Capacity Under-spending of the NG From 8.3% in 2012, and faster in 2013, but slowed in 2014

4 GDP GROWTH RATE (Quarterly, y-o-y) 2001-Q1 to 2014-Q3 Source of Basic Data: National Statistical Coordination Board (NSCB) GDP Growth on Acceleration Mode, Sputtered til Q3-2014

5 Robust Domestic Demand Faltered H1 Domestic Demand: 10.4% 4.7% Spending view: Consumption Spending Government Spending Investment Spending Construction From 8.3% in 2012, and faster in 2013, H1 has slowed

6 Resurgence in Manufacturing Sources of Basic Data: NSCB, NSO Japanese and Koreans Coming Back

7 Net New Jobs Created (000) Year Ending Survey Month Low Target of 1 M jobs per year Annual increase in labor force 1.15M Source of Basic Data: National Statistics Office (NSO) Past 3 quarters employment data in 2014 is in-line with low target of 1M

8 Inflation Has Risen But Within Target % % % Record oil prices & rice crisis Target Source of Basic Data: NSO Low Inflation: Monthly Inflation peaked at 4.9% in July-Aug. Still on Target

9 91-day T-bill and 10-year T-bond Yields (May 2005 October 2014) UITF Crises Global Financial Crisis MENA Crisis Inflation Acceleration Had Pushed Up Interest Rates Slightly Source of Basic Data: Bureau of the Treasury (BTr)

10 Part II Can PH Get Back into the Fast Tr in Q4 & Domestic Demand Outlook External Demand Outlook

11 A. Domestic Demand Outlook Consumer Spending H H Qualitative Factors Jollibee (11.2% to 12.2%, SM Malls (0% to 18%), Other Food Survey Stronger than H1 Even stronger than H2 Due to: Lower inflation Lower inflation Election spending Growth Rate 5.7% 5.6% 5.8% 6.5%

12 A. Domestic Demand Outlook Gov t Consumption Spending H H Growth Rate Qualitative Factors Overall: Extreme reaction to PDAF, DAP has played out; more spending expected Stronger than H1 Even stronger than H2 Due to: Lower inflation Lower inflation Election spending Recovery from underspending (PDAF, DAP)

13 A. Domestic Demand Outlook Investment Spending Qualitative Factors: H H Car sales: (24.8%, 37.7%), Capital Goods Imports (-9.4%, +5%) Due to: Stronger than H1 Lower inflation Even stronger than H2 Lower interest rates Faster Infra spending Imports of power plants, telecoms, aircraft Growth Rate

14 Domestic Demand Recovery H H Domestic Demand: 10.4% 4.7% 6.5% 7.5% Spending view: Consumption Spending Government Spending Investment Spending Construction Basis for 2015 Consumption Spending: Weak Peso & Exports, Election, Low Oil prices Government Spending: Reconstruction Investment Spending: Public Construction Infra & Reconstruction Durable Equipment - Utilities Property, Airlines, Mfg Pick up of pace in Q4 gets into higher gear in 2015

15 Within New, Lower Target Inflation Record oil prices & rice crisis % % % New Target Source of Basic Data: NSO Inflation Eases to 4.1% in Q4, and 2.7% in 2015// Limits interest rates rise

16 B. The World Economy s in 2015 Recovery Focused on US US to grow 3.1% Eurozone down to +1.3% More oil output from US, Canada, Saudi Arabia, Libya

17 MENA & Crude Oil Prices (WTI) Jan 2000-Dec 2015* Forecast Savings: $3.25 B + Domestic Spending P220 B or +1.2% to GDP Growth WTI (4.1%) (33.1%) Brent (8.4%) (31.6%) Source of Basic Data: US Energy Information Administration

18 OPEC Surplus Capacity & WTI Crude Oil Price Average at 2.5 MMB/day Saudi Arabia, Libya, Iran Output Source: US Energy Information Administration

19 Housing Starts Housing starts for Oct 1045, Nov 1028 Starts have exceeded 1.0 Million units in 7 of last 12 months

20 US Job New Creation 250,000+ jobs/mo. needed for strong recovery Jobs increased 321,000 (Nov) and 243,000 (Oct), and has exceeded 220,000 in 8 out of last 12 months

21 US Net New Jobs Created (000) Source of Basic Data: BLS New Jobs Created per month Exceeded 220,000 in 8 out of last 12 months

22 Source: WEO, October 2014 PH Exports Growth % 2014-H1 4.7% 2014-H2 9.2% % US GDP Growth to hit long-term trend of 3% by 2015

23 Grew annually by 28%, now employs 1.0 MM people

24 Tourist Arrivals ( ) Tourist Arrival for Jan-October M or 2.3% (y-o-y). For 2015, we expect a 10% rise. 11.3% 9.1% 9.6% New Hotel Rooms Up or Under Construction Source of Basic Data: Department of Tourism (DoT)

25 Awarded PPP Projects as of December 2014 Awarded & in Progress Expected Work in 2015 P127.4 B P 44.3 B Data and photos from PPP Center Website

26 GDP growth to accelerate due to Infra, PPP Reconstruction Work + Low Oil Prices Part III. Macroeconomic Forecasts Inflation Rate (% ) Peso-Dollar Rate (end) Gross Int'l Reserves ($B) GDP Growth Rate Industry Sector Services Sector

27 Summary Domestic Demand Slowed Down in Q1-Q Domestic Demand will Pick up Pace in Q4 and will get into higher gear in 2015 US Recovery is Solid & Boost External Demand 1.2% Added Growth Due to Low Crude Oil Prices GDP growth to accelerate due to stronger Domestic and External Factors

28 This Way!!! Victor A. Abola, Ph.D. Fast Track PH ECONOMIC FAST TRAIN-- BACK ON FAST TRACK... OR SLOWDOWN TO REPAIR BAY FMIC ECONOMIC BRIEFING January 9, 2015 Victor A. Abola, Ph.D. To Repair Bay