PART 1 ECONOMIC BRIEFING: THE PHILIPPINE ECONOMY AND THE FILIPINO PEOPLE Cid L. Terosa, Ph.D. School of Economics University of Asia and the Pacific
Outline Is the economy producing more? What type of spending is driving economic growth? Which industries are driving economic growth? Do we have enough dollars to support the economy? Are we paying more for the goods and services we buy?
Outline Is it expensive to borrow money? How are Philippine regions performing? Which provinces and cities in the Philippines have good market potential? How are Filipinos doing? Are more Filipinos poor? What are growth prospects this year?
Is the economy producing more?
GROWTH RATE (%) Growth of domestic production went down in 2015. 8 7 6 5 4 3 2 1 0 Gross Domestic Product (GDP) Growth Rate: 2000-2015 (constant 2000 prices, in %) 7.6 6.7 6.6 6.8 7.2 6.1 5 4.4 4.8 5.2 5.9 2.9 3.6 4.2 3.6 1.1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR GDP GROWTH RATE Source: Philippine Statistics Authority
GROWTH RATE (%) But growth of domestic production has been above the historical trend for most of the past 6 years. 8 7 6 5 4 3 2 1 0 Gross Domestic Product (GDP) Growth Rate: 2000-2015 (constant 2000 prices, in %) 7.6 6.7 6.6 6.8 7.2 6.1 5 4.4 4.8 5.2 5.9 2.9 3.6 4.2 3.6 1.1 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR GDP GROWTH RATE Linear (GDP GROWTH RATE) Source: Philippine Statistics Authority
2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015q4 Weaker quarterly growth in 2015 relative to 2014 % 9 8 7 6 5 4 3 2 1 0 QUARTERLY GROWTH RATE (2011-2015Q4) 7.3 7.1 7.7 7.6 7 6.5 6.3 6.5 6.8 6.7 5.6 5.7 5.9 6.2 6.5 4.9 5 3.6 4 3.2 Source: Philippine Statistics Authority YEAR AND QUARTER
2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 But stronger first quarter growth in 2016 relative to 2015. % 9 8 7 6 5 4 3 2 1 0 QUARTERLY GROWTH RATE (2011-2016Q1) 7.3 7.1 7.7 7.6 7 6.5 6.3 6.5 6.9 6 6.4 4.9 5.3 5.2 5.8 6 6.3 6.9 3.6 4 3.2 Source: Philippine Statistics Authority YEAR AND QUARTER
What type of spending is driving economic growth?
Growth of domestic production is largely driven by household consumption spending. 80.00% 60.00% 40.00% Share 20.00% 0.00% -20.00% -40.00% -60.00% HFCE GFCE CF EXP IMP SD Demand Drivers of GDP Growth 2012 2013 2014 2015 Note: computed based on data from the Philippine Statistics Authority
Capital formation and exports have consistently contributed to growth in 2014 and 2015. 80.00% 60.00% 40.00% Share 20.00% 0.00% -20.00% HFCE GFCE CF EXP IMP SD 2012 2013 2014 2015-40.00% -60.00% Demand Drivers of GDP Growth Note: computed based on data from the Philippine Statistics Authority
Which sectors are driving economic growth?
Growth of domestic production is service sector-led. SHARE 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 2012 2013 2014 2015 0.00% AGRI INDUSTRY SERVICE SECTOR Source of basic data: Philippine Statistics Authority
Which industries are driving economic growth?
Industry Drivers of the Growth of Gross INDUSTRY Domestic Product (2014 and 2015) SHARE IN GDP GROWTH (2014) SHARE IN GDP GROWTH (2015) Agriculture and Forestry 2.84% 0.93% Fishery -0.12% -0.57% Mining and Quarrying 0.86% -0.25% Manufacturing 30.83% 22.98% Construction 9.19% 9.00% Electricity, Gas, and Water 1.53% 2.66% Transportation, Storage, and Communication 7.52% 10.22% Trade and Repair 15.44% 19.63% Financial Intermediation 8.41% 7.11% Real Estate, Renting and Business Activities 15.57% 14.03% Public Admin., Defense 2.44% 0.43% Other Services 5.49% 13.82% Note: Computed based on data from the National Statistical Coordination Board-Philippine Statistics Authority..
SHARE IN GDP GROWTH, %) For the past three years, manufacturing, trade, and real estate accounted for more than 55% of growth. 70 60 50 40 30 20 10 0 2013 2014 2015 YEAR MFGTRADEREALESTATE OTHERS Source of basic data: National Statistical Coordination Board-Philippine Statistics Authority
The share of manufacturing in growth continues to fall, but the share of trade continues to rise. INDUSTRY SHARE IN GDP GROWTH (2013) SHARE IN GDP GROWTH (2014) SHARE IN GDP GROWTH (2015) AGRICULTURE, FORESTRY, FISHERY 2.70% 2.72% 0.36% MANUFACTURING 32.45% 30.83% 22.98% CONSTRUCTION AND REAL ESTATE 21.13% 24.76% 23.3% TRADE AND REPAIR 15.17% 15.44% 19.63% OTHER SERVICES 7.98% 5.49% 13.82% Source of basic data: National Statistical Coordination Board-Philippine Statistics Authority
Do we have enough dollars to support the economy?
CURRENT ACCOUNT We are earning more dollars from trade through time. 14000 12000 10000 8000 6000 4000 2000 0-2000 -4000 CURRENT ACCOUNT:2000-2015 (IN MILLION US$) 20002001 20022003200420052006 2007200820092010 2011201220132014 2015 YEAR Source: Bangko Sentral ng Pilipinas CURRENT ACCOUNT
CURRENT ACCOUNT But dollar earnings from trade fell below historical trend in 2015. 14000 12000 10000 8000 6000 4000 2000 0-2000 -4000 CURRENT ACCOUNT:2000-2015 (IN MILLION US$) 20002001 20022003200420052006 2007200820092010 2011201220132014 2015 YEAR CURRENT ACCOUNT Linear (CURRENT ACCOUNT) Source: Bangko Sentral ng Pilipinas
GIR Reserves rose in 2015 90 80 70 60 50 40 30 20 10 0 GROSS INTERNATIONAL RESERVES (in billion US$) 84.25 83.9 79.8 80.67 75.3 62.37 44.24 33.75 37.55 15.0615.6916.3617.0616.23 18.4922.97 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR Source: Bangko Sentral ng Pilipinas
GIR But reserves fell below historical trend in 2015 (for the first time in 6 years). 100 GROSS INTERNATIONAL RESERVES: 2000-2015 (in billion US$) 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR Series1 Linear (Series1) Source: Bangko Sentral ng Pilpinas
GIR Reserves are still more than enough for our needs. 100 80 60 40 20 0 GROSS INTERNATIONAL RESERVES: 2000-2015 (in billion US$) 6-months benchmark GIR YEAR Source: Bangko Sentral ng Pilipinas
NIR We have enough reserves even after paying for short-term debts. 100 80 Net International Reserves (in billion US$) 6 months benchmark 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR Source: Bangko Sentral ng Pilipinas NIR
REMITTANCES More dollars from family and friends REMITTANCES: 2000-2015 (in billion US$) 30 25 20 15 10 5 0 6.05 6.03 6.89 7.58 12.76 14.4516.4317.35 10.69 8.55 18.76 20.1221.3922.98 24.35 25.77 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR Series1 Source: Bangko Sentral ng Pilipinas
REMITTANCES Inflow of remittances is still consistent with historical trend. REMITTANCES: 2000-2015 (in billion US$) 30 25 20 15 10 5 0 6.05 6.03 12.76 14.4516.4317.35 10.69 6.89 7.58 8.55 18.76 20.1221.3922.98 24.35 25.77 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR REMITTANCES Linear (REMITTANCES) Source: Bangko Sentral ng Pilipinas
GIR AND PESO-DOLLAR RATE As reserves increase, the peso-dollar rate becomes relatively strong and stable. 100 GROSS INTERNATIONAL RESERVES (in billion US$) AND PESO-DOLLAR EXCHANGE RATE (2000-2015) 80 60 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR RESERVES EXCHANGE RATE Source: Bangko Sentral ng Pilipinas
Are we paying more for the goods and services we buy?
INFLATION RATE, % Inflation rate in 2015 was the lowest since 2000. 9 8 7 6 5 4 3 2 1 0 INFLATION RATE (IN %, 2006=100) 8.3 6.7 6.5 5.3 5.5 4.8 4.2 4.6 3.8 4.1 2.7 2.9 3.2 3 2.3 1.4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR INFLATION RATE Linear (INFLATION RATE) Source: National Statistical Coordination Board-Philippine Statistics Authority
As reserves grow and the peso-dollar rate remains relatively strong, inflation remains stable 90 80 70 60 50 40 30 20 10 0 TREND OF RESERVES, PESO-DOLLAR RATE, AND INFLATION RATE: 2000-2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 INFLATION RATE PESO-DOLLAR RATE RESERVES Source: Bangko Sentral ng Pilipinas and National Statistical Coordination Board
Is it expensive to borrow money?
INTEREST RATE, IN % Falling domestic interest rates 14 12 10 8 6 4 2 0 91-DAY TREASURY BILL RATE AND AVERAGE BANK LENDING RATE: 2000-2015 (in %) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR T-BILL RATE (91 DAY) BANK LENDING RATE Source: Bangko Sentral ng Pilipinas
INTEREST RATE, IN % Lower inflation rate, lower domestic interest rates 14 12 10 8 6 4 2 0 91-DAY TREASURY BILL RATE, AVERAGE BANK LENDING RATE, AND INFLATION RATE : 2000-2015 (in %) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR T-BILL RATE (91 DAY) BANK LENDING RATE INFLATION RATE Source: Bangko Sentral ng Pilipinas
How are Philippine regions performing?
GROWTH RATE From 2011 to 2014, Mindanao was never the slowest growing island-region in the country. GROWTH OF PRODUCTION: 2011-2014 (by region, in %) 10 PHILIPPINES NCR LUZON VISAYAS MINDANAO 8 6 4 2 0 2011 2012 2013 2014 YEAR Source: National Statistical Coordination Board-Philippine Statistics Authority
CONTRIBUTION TO GROWTH From 2012 to 2014, Mindanao contributed more to the growth of the national economy than the Visayas. 3.5 3 2.5 2 1.5 1 0.5 0 CONTRIBUTION TO GROWTH OF PRODUCTION: 2011-2014 (by region, in %) NCR LUZON VISAYAS MINDANAO 2.5 2.4 1.1 1.2 1.2 1.1 0.9 0.7 0.6 0.7 0.7 0.7 3.3 2.2 2.3 2.1 2011 2012 2013 2014 YEAR Source: National Statistical Coordination Board-Philippine Statistics Authority
Which regions in Luzon contributed more to the growth of domestic production? REGION 2011 (%) 2012 (%) 2013 (%) 2014(%) Philippines (GDP growth rate, in %) 3.6 6.8 7.1 6.1 NCR 1.1 2.5 3.3 2.1 CAR 0.0 0.0 0.1 0.1 Ilocos Region 0.1 0.2 0.2 0.2 Cagayan Valley 0.1 0.1 0.1 0.1 Central Luzon 0.6 0.6 0.4 0.8 CALABARZON 0.3 1.3 1.2 0.9 MIMAROPA 0.1 0.1 0.0 0.1 BICOL 0.0 0.1 0.2 0.1 Source: National Statistical Coordination Board Philippine Statistics Authority
Which region in the Visayas contributed more to the growth of domestic production? REGION 2011 (%) 2012 (%) 2013 (%) 2014 (%) Philippines (GDP growth rate, in %) Western Visayas Central Visayas Eastern Visayas 3.6 6.8 7.1 6.1 0.2 0.2 0.1 0.2 0.4 0.6 0.5 0.6 0.1-0.2 0.1-0.1 Source: National Statistical Coordination Board-Philippine Statistics Authority
Which regions in Mindanao contributed more to the growth of domestic production? REGION 2011 (%) 2012 (%) 2013 (%) 2014(%) Philippines (GDP growth rate, in %) Zamboanga Peninsula Northern Mindanao 3.6 6.8 7.1 6.1 0.0 0.3 0.1 0.1 0.2 0.3 0.2 0.3 Davao Region 0.1 0.3 0.3 0.4 Soccsksargen 0.1 0.2 0.2 0.2 CARAGA 0.1 0.1 0.1 0.1 ARMM -0.0 0.0 0.0 0.0 Source: National Statistical Coordination Board-Philippine Statistics Authority
Which regions are growing faster than the national economy? AVERAGE GROWTH RATE (2012-2014) (IN %) PHILIPPINES 6.5 1. CARAGA 9.9 2. CENTRAL VISAYAS 8.3 3. SOCCSKSARGEN 7.9 4. DAVAO REGION 7.8 5. NORTHERN MINDANAO 7.3 6. NATIONAL CAPITAL REGION 7.1 7. ZAMBOANGA PENINSULA 6.9 8. CAGAYAN VALLEY 6.8 9. CENTRAL LUZON 6.5 Source: National Statistical Coordination Board-Philippine Statistics Authority
Which regions are creating more jobs than the national economy? AVERAGE EMPLOYMENT GROWTH RATE (2012-2014) (IN %) PHILIPPINES 1.29 1. ARMM 4.24 2. BICOL 3.42 3. CARAGA 3.27 4. CALABARZON 3.00 5. CENTRAL LUZON 2.45 6. CENTRAL VISAYAS 2.40 7. DAVAO REGION 2.20 8. NCR 2.05 9. NORTHERN MINDANAO 1.63 Source: Bureau of Labor and Employment Statistics
MORE PRODUCTION, MORE JOBS AVERAGE EMPLOYMENT GROWTH (2012-2014) MORE THAN AVERAGE EMPLOYMENT GROWTH LESS THAN AVERAGE EMPLOYMENT GROWTH AVERAGE GROWTH RATE OF GROSS REGIONAL DOMESTIC PRODUCT (2012-2014) MORE THAN AVERAGE OUTPUT GROWTH LESS THAN AVERAGE OUTPUT GROWTH NCR * CENTRAL LUZON * CENTRAL VISAYAS * NORTHERN MINDANAO DAVAO REGION CARAGA CALABARZON * BICOL REGION ARMM CAGAYAN VALLEY * ZAMBOANGA PENINSULA SOCCSKSARGEN * CAR ILOCOS MIMAROPA * WESTERN VISAYAS EASTERN VISAYAS * Source of Basic Data: NSCB-PSA and BLES
SHARE Distribution of Household Spending (2014) 25 23.5 SHARE OF REGIONS IN HOUSEHOLD SPENDING(%) 20 15 12.2 16.1 10 5 1.6 4.6 2.8 2.3 4.3 6.4 6.5 3.4 2.4 3.5 3.9 3.3 1.6 1.5 0 REGION Source of Basic Data: National Statistical Coordination Board-Philippine Statistics Authority
In which regions is household spending growing faster than the national economy? AVERAGE GROWTH OF HOUSEHOLD FINAL CONSUMPTION SPENDING (2012-2014) (IN %) PHILIPPINES 5.7 1. MIMAROPA * 7.1 2. ZAMBOANGA PENINSULA * 6.9 3. CENTRAL VISAYAS * 6.9 4. DAVAO REGION 6.7 5. CENTRAL LUZON 6.3 6. NORTHERN MINDANAO * 6.1 7. ILOCOS REGION 5.9 Source: National Statistical Coordination Board-Philippine Statistics Authority
PRODUCING AND SPENDING MORE AVERAGE GROWTH RATE OF GROSS REGIONAL DOMESTIC PRODUCT (20012-2014) AVERAGE GROWTH RATE OF HOUSEHOLD FINAL CONSUMPTION SPENDING (2012-2014) ABOVE NATIONAL AVERAGE GDP BELOW NATIONAL AVERAGE GDP ABOVE NATIONAL AVERAGE CONSUMPTION SPENDING CENTRAL LUZON CENTRAL VISAYAS * NORTHERN MINDANAO * ZAMBOANGA PENINSULA DAVAO REGION ILOCOS REGION MIMAROPA * BELOW NATIONAL AVERAGE CONSUMPTION SPENDING NCR CAGAYAN VALLEY * CARAGA * SOCCSKSARGEN * CALABARZON CAR * BICOL REGION WESTERN VISAYAS EASTERN VISAYAS * ARMM * Source of Basic Data: National Statistical Coordination Board- Philippine Statistics Authority
Regions that grew faster than the national economy in terms of production, employment, and spending (2012-2014) CENTRAL LUZON CENTRAL VISAYAS NORTHERN MINDANAO DAVAO REGION
Which provinces and cities in the Philippines have good market potential?
TOP PROVINCES IN TERMS OF MARKET POTENTIAL TOP TEN PROVINCES NEXT TEN PROVINCES 1. CEBU 11. NEGROS OCCIDENTAL 2. CAVITE 12. NUEVA ECIJA 3. BATANGAS 13. ILOILO 4. BULACAN 14. SOUTH COTABATO 5. LAGUNA 15. BATAAN 6. PAMPANGA 16. ZAMBOANGA DEL SUR 7. DAVAO DEL SUR 17. QUEZON 8. RIZAL 18. BOHOL 9. MISAMIS ORIENTAL 19. LEYTE 10. PANGASINAN 20. NEGROS ORIENTAL
TOP REGIONAL PROVINCES REGION CORDILLERA AUTONOMOUS REGION ILOCOS REGION CAGAYAN CENTRAL LUZON CALABARZON MIMAROPA BICOL TOP PROVINCE(S) BENGUET PANGASINAN, LA UNION CAGAYAN, ISABELA BULACAN, PAMPANGA CAVITE, BATANGAS PALAWAN, OCCIDENTAL MINDORO CAMARINES SUR, ALBAY
TOP REGIONAL PROVINCES REGION WESTERN VISAYAS CENTRAL VISAYAS EASTERN VISAYAS ZAMBOANGA PENINSULA NORTHERN MINDANAO DAVAO REGION CARAGA TOP PROVINCE(S) ILOILO, NEGROS OCCIDENTAL CEBU, BOHOL LEYTE ZAMBOANGA DEL SUR MISAMIS ORIENTAL, BUKIDNON DAVAO DEL SUR, DAVAO DEL NORTE AGUSAN DEL NORTE, SURIGAO DEL NORTE
TOP CITIES IN TERMS OF MARKET POTENTIAL TOP TEN CITIES NEXT TEN CITIES 1. CEBU CITY 11. MANDAUE CITY 2. DAVAO CITY 12. LAPU-LAPU CITY 3. CAGAYAN DE ORO CITY 13. DASMARINAS CITY 4. STA. ROSA CITY 14. ANGELES CITY 5. ILOILO CITY 15. CABUYAO CITY 6. CALAMBA CITY 16. BINAN CITY 7. BACOLOD CITY 17. BAGUIO CITY 8. BATANGAS CITY 18. GENERAL SANTOS CITY 9. ANTIPOLO CITY 19. CABANATUAN CITY 10. SAN FERNANDO CITY (PAMPANGA) 20. LIPA CITY
REGION TOP CITIES (BY REGION) TOP CITY/ CITIES CORDILLERA AUTONOMOUS REGION ILOCOS REGION CAGAYAN BAGUIO CITY DAGUPAN CITY, SAN FERNANDO CITY (LA UNION), LAOAG CITY SANTIAGO CITY, CAUAYAN CITY CENTRAL LUZON SAN FERNANDO CITY (PAMPANGA), ANGELES CITY, CABANATUAN CITY, TARLAC CITY, MEYCAUAYAN CITY CALABARZON MIMAROPA STA.ROSA CITY, CALAMBA CITY, BATANGAS CITY, ANTIPOLO CITY, DASMARINAS CITY PUERTO PRINCESA CITY, CALAPAN CITY BICOL NAGA CITY, LEGASPI CITY, SORSOGON CITY
REGION TOP CITIES (BY REGION) TOP CITY/ CITIES WESTERN VISAYAS CENTRAL VISAYAS EASTERN VISAYAS ZAMBOANGA PENINSULA NORTHERN MINDANAO DAVAO REGION CARAGA ILOILO CITY, BACOLOD CITY, ROXAS CITY, KABANKALAN CITY, TALISAY CITY CEBU CITY, MANDAUE CITY, LAPU-LAPU CITY, DUMAGUETE CITY, TALISAY CITY (CEBU) TACLOBAN CITY, ORMOC CITY, MAASIN CITY ZAMBOANGA CITY, PAGADIAN CITY, DIPOLOG CITY CAGAYAN DE ORO CITY, ILIGAN CITY, OZAMIS CITY, VALENCIA CITY DAVAO CITY, TAGUM CITY, DIGOS CITY BUTUAN CITY, SURIGAO CITY
REGIONS WITH BETTER MARKET POTENTIAL Summing up PROVINCES WITH HIGHER LEVELS OF MARKET POTENTIAL CITIES WITH HIGHER LEVELS OF MARKET POTENTIAL 1. NCR 1. CEBU 1. CEBU CITY 2.CALABARZON 2. CAVITE 2. DAVAO CITY 3.CENTRAL LUZON 3. BATANGAS 3. CAGAYAN DE ORO CITY 4. CENTRAL VISAYAS 4. BULACAN 4. STA. ROSA CITY 5. WESTERN VISAYAS 5. LAGUNA 5. ILOILO CITY 6.BICOL REGION 6. PAMPANGA 6. CALAMBA CITY 7. NORTHERN MINDANAO 7. DAVAO DEL SUR 7. BACOLOD CITY 8. MIMAROPA 8. RIZAL 8. BATANGAS CITY 9. ILOCOS REGION 9.MISAMIS ORIENTAL 9. ANTIPOLO CITY 10. DAVAO REGION 10. PANGASINAN 10. SAN FERNANDO CITY, PAMPANGA
How are Filipinos doing?
More than 25% of the population is still poor, but poverty incidence is slowly improving. 29 28.5 28 Poverty incidence in the Philippines (%,headcount, 2006-2015) 28.8 28.6 27.9 27.5 27 26.5 26.3 26 25.5 25 2006 2009 2012 2015 POVERTY INCIDENCE Source of data: Philippine Statistics Authority
Poverty incidence in Mindanao is the worst, but it has slowly improved. 50 Poverty Incidence in the Philippines (%, headcount, 2006-2015) 45 40 35 38.137.6 35.6 34.2 42.8 43 43.2 41.3 30 25 20 28.828.627.9 26.3 19.719.518.7 17.4 15 10 5 4.4 5.3 5.4 6.5 0 PHILIPPINES NCR LUZON VISAYAS MINDANAO Source of data: Philippine Statistics Authority 2006 2009 2012 2015
Change in poverty incidence Mindanao recorded the highest decrease in poverty incidence from 2012 to 2015. 1.5 Change in poverty incidence (2006-2015, in percentage points) 1 0.5 0-0.5-1 -1.5-2 -2.5 2006-2009 2009-2012 2012-2015 PHIL. -0.2-0.7-1.6 NCR 1 0.1 1.1 LUZON -0.7-1.1 0.9 VISAYAS -0.5-2 -1.4 MINDANAO 0.2 0.3-1.9 Source of data: Philippine Statistics Authority
Poverty Incidence in the NCR and Luzon: 2012 and 2015 (headcount, in %) 2012 2015 CHANGE PHILIPPINES 27.9 26.3-1.6 NCR 5.4 6.5 1.1 CORDILLERA 28.7 26.7-2.0 * ILOCOS REGION 21.1 21.7-0.6 CAGAYAN VALLEY 25.0 21.5-3.5 * CENTRAL LUZON 15.6 15.8 0.2 CALABARZON 14.3 13.4-0.9 MIMAROPA 37.2 29.8-7.4 * BICOL REGION 43.3 39.0-4.3 * Source: Philippine Statistics Authority
Poverty incidence in the Visayas: 2012 and 2015 (headcount, in %) 2012 2015 CHANGE PHILIPPINES 27.9 26.3-1.6 WESTERN VISAYAS 31.7 30.5-1.2 CENTRAL VISAYAS 33.6 30.5-3.1 * EASTERN VISAYAS 45.4 47.3 1.9 Source: Philippine Statistics Authority
Poverty incidence in Mindanao: 2012 and 2015 (headcount, in %) 2012 2015 CHANGE PHILIPPINES 27.9 26.3-1.6 ZAMBOANGA PEN. 42.8 39.0-3.8 * N. MINDANAO 43.1 40.9-2.2 DAVAO REGION 34.5 26.7-7.8 * SOCCSKSARGEN 45.8 44.5-1.3 CARAGA 42.0 43.9 1.9 ARMM 52.9 59-6.1 * Source: Philippine Statistics Authority
Faster production growth, greater decrease in poverty incidence? CHANGE IN POVERTY INCIDENCE (2012 AND 2015) GREATER CHANGE IN POVERTY INCIDENCE RELATIVE TO THE PHILIPPINES LESSER CHANGE IN POVERTY INCIDENCE RELATIVE TO THE PHILIPPINES AVERAGE GROWTH RATE OF GROSS REGIONAL DOMESTIC PRODUCT (2012-2014) MORE THAN AVERAGE OUTPUT GROWTH LESS THAN AVERAGE OUTPUT GROWTH CAGAYAN VALLEY CENTRAL VISAYAS ZAMBOANGA PENINSULA NORTHERN MINDANAO DAVAO REGION CAR BICOL REGION ARMM MIMAROPA ILOCOS REGION CALABARZON WESTERN VISAYAS NCR CENTRAL LUZON SOCCSKSARGEN CARAGA EASTERN VISAYAS Source of Basic Data: NSCB-PSA
Faster job growth, greater decrease in poverty incidence? CHANGE IN POVERTY INCIDENCE (2012 AND 2015) GREATER CHANGE IN POVERTY INCIDENCE RELATIVE TO THE PHILIPPINES LESSER CHANGE IN POVERTY INCIDENCE RELATIVE TO THE PHILIPPINES AVERAGE GROWTH RATE OF EMPLOYMENT (2012-2014) MORE THAN AVERAGE JOB GROWTH BICOL REGION CENTRAL VISAYAS NORTHERN MINDANAO DAVAO REGION ARMM NCR CENTRAL LUZON CALABARZON CARAGA LESS THAN AVERAGE JOB GROWTH CAR MIMAROPA CAGAYAN VALLEY ZAMBOANGA PENINSULA EASTERN VISAYAS ILOCOS REGION WESTERN VISAYAS SOCCSKSARGEN Source of Basic Data: NSCB-PSA
11 of the 20 poorest provinces in the Philippines are in Mindanao. TOP 10 PROVINCES POVERTY INCIDENCE (2015,%) NEXT 10 PROVINCES POVERTY INCIDENCE (2015,%) 1. Lanao del Sur 70.2 11. Negros Oriental 41.9 2. Sulu 61.8 12. N. Cotabato 41.8 3. Sarangani 54.5 13. W. Samar 41.8 4. Bukidnon 53.6 14. Lanao del Norte 41.4 5. Siquijor 53.0 15. Mt. Province 40.7 6. Northern Samar 52.4 16. E. Samar 40.1 7. Maguindanao 50.4 17. Camiguin 40.0 8. Sultan Kudarat 47.4 18. Catanduanes 39.7 9. Zamb. del Norte 45.8 19.Apayao 37.5 10.Agusan del Sur 44.7 20.Camarines Norte 36.5 Source of Basic Data: Philippine Statistics Authority
Has poverty incidence gone down in provinces with the highest poverty incidence? TOP 10 PROVINCES POVERTY INCIDENCE (2012,%) POVERTY INCIDENCE (2015, %) CHANGE (percentage points) 1. Lanao del Sur 68.9 70.2 1.3 2. Sulu 30.3 61.8 31.5 3. Sarangani 46.5 54.5 8.0 4. Bukidnon 43.3 53.6 10.3 5. Siquijor 24.6 53.0 28.4 6. Northern Samar 43.7 52.4 8.7 7. Maguindanao 57.8 50.4-7.4 8. Sultan Kudarat 41.6 47.4 5.8 9. Zamb. Del Norte 50.3 45.8-4.5 10.Agusan del Sur 38.6 44.7 6.1 Source of Basic Data: Philippine Statistics Authority
SECTORS Which groups of individuals have higher poverty incidence? POVERTY INCIDENCE (FOR THE PHIL., 2012,IN %) FISHERMEN 39.2 FARMERS 38.3 CHILDREN 35.2 SELF-EMPLOYED AND UNPAID FAMILY WORKERS 29.0 WOMEN 25.6 YOUTH 22.3 EMPLOYED 21.9 UNEMPLOYED 18.7 MIGRANTS AND FORMAL SECTOR WORKERS 16.6 SENIOR CITIZENS 16.2 INDIV. LIVING IN URBAN AREAS 13.0 Source of basic data: Philippine Statistics Authority
In which regions is poverty incidence highest for different groups of individuals? SECTORS FISHERMEN FARMERS CHILDREN SELF-EMPLOYED AND UNPAID FAMILY WORKERS WOMEN YOUTH EMPLOYED UNEMPLOYED MIGRANTS AND FORMAL SECTOR WORKERS SENIOR CITIZENS INDIV. LIVING IN URBAN AREAS TOP 3 REGIONS WITH HIGH POVERTY INCIDENCE (2012,IN %) CARAGA, E.VISAYAS, BICOL ARMM, N.MINDANAO, ZAMB. PENINSULA ARMM, E.VISAYAS, SOCCSKSARGEN ARMM, ZAMB. PENINSULA, N. MINDANAO ARMM, E.VISAYAS, SOCCSKSARGEN ARMM, E. VISAYAS, SOCCSKSARGEN ARMM, E. VISAYAS, SOCCSKSARGEN ARMM, E.VISAYAS, N. MINDANAO ARMM, SOCCSKSARGEN, BICOL ARMM, SOCCSKSARGEN, E.VISAYAS ARMM, SOCCSKSARGEN, CARAGA Source of basic data: Philippine Statistics Authority
What are the prospects for economic growth this year?
GROWTH RATE (%) Production this year could grow faster than last year. 8 7 6 5 4 3 2 1 0 Gross Domestic Product (GDP) Growth Rate: 2000-2015 (constant 2000 prices, in %) 7.6 6.7 6.6 6.8 7.2 6.1 5 4.4 4.8 5.2 5.9 2.9 3.6 4.2 3.6 1.1 2000200120022003200420052006200720082009201020112012201320142015 YEAR GDP GROWTH RATE Linear (GDP GROWTH RATE) Source: Philippine Statistical Authority
2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 Strong first quarter growth in 2016 relative to 2015 % 10 9 8 7 6 5 4 3 2 1 0 QUARTERLY GROWTH RATE (2010-2016Q1) 8.4 8.9 7.3 6.1 4.9 3.6 3.2 4 6.56.3 7.3 7.1 7.7 7.6 7 6.5 6 6.4 6.9 5.3 5 5.96.26.56.9 Source: Philippine Statistical Authority YEAR AND QUARTER Series1
2010Q1 2010Q2 2010Q3 2010Q4 2011Q1 2011Q2 2011Q3 2011Q4 2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 Rising quarterly growth trend since the first quarter of 2015 10 QUARTERLY GDP GROWTH RATE (2010-2016Q1) 8 % 6 4 2 0 Source: Philippine Statistical Authority YEAR AND QUARTER GDP GROWTH RATE (BY QUARTER)
Growth Drivers (rest of 2016) Demand Drivers of Growth Household Family Consumption Spending Government spending Investments (if foreign ownership restrictions are relaxed) Industry Drivers of Growth Manufacturing Construction Trade Private business services Real Estate and related activities
Downside Risk Factors La Niña Geopolitical tensions (Middle East, Asia) Negative investor sentiments and perceptions Weak global economic outlook Calamities, natural disasters Rising cost of petroleum products, electricity, and water Economic performance of developed countries Growth slowdown in China
Will we earn more dollars this year? SOME FACTORS TO CONSIDER Growth prospects of major trading partners (USA, Japan, China) Geopolitical risks and economic performance of countries in the Middle East Policy actions of developed countries particularly the USA Remittances and tourism revenues Inflow of foreign investments
REMITTANCES Will family and friends remit more dollars this year? REMITTANCES: 2000-2015 (in billion US$) 30 25 20 15 10 5 0 12.76 14.4516.4317.3518.76 6.05 6.03 6.89 7.58 8.5510.69 20.12 21.3922.9824.3525.7726.8 YEAR Cash remittances Source: Bangko Sentral ng Pilipinas
Growth of remittances will continue to be slower in 2016. Growth of remittances (2009-2015, in %) 9 8 7 6 5 4 3 2 1 0 5.6 8.2 7.2 6.3 7.4 7.2 4.6 4 GROWTH RATE Linear (GROWTH RATE) Source of data: Bangko Sentral ng Pilipinas
But encouraging trend for the first four months of 2016. 8.7 8.65 8.6 8.55 8.5 8.45 8.4 8.35 8.3 8.25 TOTAL CASH REMITTANCES: JANUARY-APRIL 2015 AND 2016 (IN BILLION $) JAN-APRIL2015 Total cash remittances JAN-APRIL2016 Source of data: Bangko Sentral ng Pilipinas
Will the peso be stronger or weaker? SOME FACTORS TO CONSIDER Growth prospects of developed countries particularly the USA Geopolitical risks and economic performance of countries in the Middle East Policy actions of developed countries particularly the USA Remittances and tourism revenues Inflow of foreign investments
Will the peso be stronger or weaker? FACTOR Economic recovery in developed countries Outflow of investments due to geopolitical risks and policy actions of developed countries particularly the USA Sustained increase in remittances and tourism revenues Inflow of investments due to sustained strong economic performance of the country TENDENCY OF THE PESO-DOLLAR RATE weaken weaken strengthen strengthen
Will the peso be stronger or weaker? 120 100 Gross International Reserves and Peso-Dollar Rate Forecast Trend for GIR 80 60 40 20 0 2000200120022003200420052006200720082009201020112012201320142015 GIR peso-dollar rate Linear (GIR)
INFLATION RATE, % Will we be paying more for the goods and services we buy? INFLATION RATE (IN %, 2006=100) 9 8 7 6 5 4 3 2 1 0 6.7 5.3 2.7 2.3 4.8 6.5 5.5 2.9 8.3 4.2 3.8 4.6 3.2 3 4.1 1.4 1.3 YEAR INFLATION RATE Linear (INFLATION RATE) Source: National Statistical Coordination Board-Philippine Statistics Authority
If reserves continue to grow and the peso does not drastically lose value, inflation may remain stable. 90 80 70 60 50 40 30 20 10 0 TREND OF RESERVES, PESO-DOLLAR RATE, AND INFLATION RATE: 2000-2015 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 INFLATION RATE PESO-DOLLAR RATE GIR Source: Bangko Sentral ng Pilipinas and National Statistical Coordination Board
Will we be paying more for the goods and services we buy? COST-PUSH FACTORS Prices of imported production inputs Price of labor inputs Cost of borrowing money When peso is STRONG relatively stable relatively stable PRESSURE ON PRICES
Will we be paying more for the goods and services we buy? STRUCTURAL AND RISK FACTORS Supply bottlenecks and rigidities Domestic and international political tensions Due to disasters, calamities, etc. Middle East, West Philippine Sea, PRESSURE ON PRICES
Will domestic interest rates continue to be low? 14 12 10 8 6 4 2 0 91-DAY TREASURY BILL RATE AND AVERAGE BANK LENDING RATE: 2000-2014 (in %) 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 YEAR T-BILL RATE (91 DAY) BANK LENDING RATE Source: Bangko Sentral ng Pilipinas
FACTORS Inflation rate Domestic Liquidity Will domestic interest rates continue to be low? relatively low and stable positive growth, sufficient level PRESSURE ON INTEREST RATES Government deficit manageable levels Intermediation Cost relatively stable Monetary Policy of the USA higher interest rate regime
Fearful forecast (2016) ECONOMIC INDICATOR 2016 forecast GROSS DOMESTIC PRODUCT 6.0 6.5% INFLATION RATE 1.9 2.3% PESO-DOLLAR RATE AVERAGE BANK LENDING RATE 45 47 PESOS: 1 DOLLAR 5.5-6%
What are the prospects for growth in Mindanao this year?
When the national economy grows, some Mindanao regions grow with it.
Some regions in Mindanao have been growing faster than the national economy AVERAGE GROWTH RATE (2012-2014) (IN %) PHILIPPINES 6.5 1. CARAGA 9.9 2. CENTRAL VISAYAS 8.3 3. SOCCSKSARGEN 7.9 4. DAVAO REGION 7.8 5. NORTHERN MINDANAO 7.3 6. NATIONAL CAPITAL REGION 7.1 7. ZAMBOANGA PENINSULA 6.9 8. CAGAYAN VALLEY 6.8 9. CENTRAL LUZON 6.5 Source of data: National Statistical Coordination Board-Philippine Statistics Authority
What could positively affect Mindanao s economic growth prospects this year? President is from Mindanao Industry drivers of growth Agriculture and agribusiness Construction and Real Estate Wholesale and Retail Trade Tourism and tourism-related industries (hotels, restaurants, transport services, personal services, etc.)
What other factors need to be considered? External shocks (oil prices, economic performance of China, USA, Eurozone, etc.) State of infrastructure of Mindanao Value-added of raw materials and products from Mindanao Development of manufacturing industries La Niña, natural disasters ASEAN Economic Community Federalism
Cooperatives should ride the wave of strong economic growth in some Mindanao regions. CARAGA, SOCCSKSARGEN, Northern Mindanao, and Davao Region have been growing faster than the national economy. Around 70% of the total number of cooperatives in Mindanao are in these regions.
How can Mindanao cooperatives ride the wave of regional economic growth? Establish and strengthen linkages with industry drivers of growth Mindanao, particularly ARMM, has the biggest number of producer and marketing cooperatives in the Philippines. Davao Region has the greatest number of MPC, consumer cooperatives, and service cooperatives in Mindanao. Northern Mindanao has the biggest number of credit cooperatives in Mindanao.
How can Mindanao cooperatives ride the wave of regional economic growth? Diversify goods and services to diversify linkages with business and industry Broaden the market horizon of cooperatives Keep cooperatives updated with market trends, business practices, current issues, related policy developments etc.
How can Mindanao cooperatives ride the wave of regional economic growth? Find opportunities in risk factors that negatively affect growth If food, energy, and water are looming future challenges, how can cooperatives become possible solutions or parts of solutions to these problems?
PART 2 ECONOMIC INTEGRATION, SUSTAINABLE DEVELOPMENT GOALS, AND COOPERATIVES
ASEAN Economic Community and Cooperatives
What is the ASEAN Economic Community? ASEAN Economic Community One pillar of the ASEAN Community agenda Aims to broaden and deepen economic integration among ASEAN membercountries
What are the four pillars of the ASEAN Economic Community? ASEAN Economic Community Has four pillars Single market and production base Highly competitive region Region of equitable development Region fully integrated into the global community
How will the four pillars of the ASEAN Economic Community be achieved? LIBERALIZATION OF TRADE IN SERVICES LIBERALIZATION OF TRADE IN GOODS LIBERALIZATION OF INVESTMENTS FOUR PILLARS OF AEC
Are cooperatives sufficiently covered by the ASEAN Economic Community blueprint? ASEAN Economic Community blueprint The only type of cooperative mentioned in the blueprint is agricultural cooperatives. No mention of all other types of cooperatives Thus, cooperatives have to be more broadly considered in the ASEAN Economic Community agenda.
What are the economic implications of the ASEAN Economic Community? ASEAN Economic Community implies Bigger and more diverse markets Greater competition Specialization based on comparative advantage
What are some possible broad responses of cooperatives to the ASEAN Economic Community? LEVEL UP QUANTITY AND QUALITY CREATE AND INNOVATE LINK AND INTEGRATE PARTNER AND COLLABORATE COLLECT AND DISSEMINATE
Sustainable Development Goals and Cooperatives
What are sustainable development goals? 17 goals to end poverty, fight inequality and injustice, tackle climate change by 2030 Builds on the Millennium Development Goals (2000-2015) Sustainable development goals address the root causes of poverty and the universal need for inclusive growth and development
What can cooperatives contribute to the attainment of sustainable development goals? Sustainable development goal 1. No poverty 2. Zero hunger 3. Good health and wellbeing 4. Quality education 5. Gender Equality 6. Clean water and sanitation 7. Affordable and clean energy 8. Decent work and economic growth Can cooperatives contribute? (Yes/No) How?
What can cooperatives contribute to the attainment of sustainable development goals? Sustainable development goal 9. Industry, Innovation, and Infrastructure 10. Reduced inequalities 11. Sustainable cities and communities 12. Responsible consumption and production 13. Climate action 14. Sustainable life below water 15.Sustainable life on land Can cooperatives contribute? (Yes/No) How?
What can cooperatives contribute to the attainment of sustainable development goals? Sustainable development goal 16. Peace and justice, strong institutions 17. Partnerships for the goals Can cooperatives contribute? (Yes/No) How?
Thank you!