Asian Development Bank

1
Asian Development Bank

• The Status of the Philippine Economy
• by
• Günter Hecker

January, 2001
2
Asian Development Bank

• The Status of the Philippine Economy
• by
• Günter Hecker

December, 2000
3
(No Transcript)
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What you hear about the Philippines in the news
lately

• Corruption and cronyism are at a high point
• Governance low
• Administration not functioning
• Budget in disarray, therefore
• IMF has walked out on the Philippines,
  therefore..
• Investors confidence going towards the
  zero-point
• Peso at all time low
• Stock market at rock-bottom
• Economy in shambles
• Project implementation takes twice as long as it
  should

5
What you hear about the Philippines in the news
lately

• Corruption and cronyism are at a high point
• Governance low
• Administration not functioning
• Budget in disarray, therefore
• IMF has walked out on the Philippines,
  therefore..
• Investors confidence going towards the
  zero-point
• Peso at all time low
• Stock market at rock-bottom
• Economy in shambles
• Project implementation takes twice as long as it
  should

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GDP Growth ()least affected by the crisis,
but moderate recovery
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Inflation Rate ().stayed in manageable
levels
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Current Account Balance as of GDPhas been
increasing since the crisis to second place
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Exports of Goods and Services Growth
().exports are growing, while.
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Imports of Goods and Services Growth ()imports
are contracting
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Exchange Rate Index(weekly average, last week of
June 1997 100, /local currency)..rates moved
together with the other comparator currencies
J2K Effect
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Pesos vis-à-vis Euro
J2K Effect
EDSA2 Effect
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Composite Stock Price Index (weekly average,
last week of June 1997100)
J2k Effect
EDSA2 Effect
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NPL of Commercial Banks..low but slightly
increasing
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Gross Int'l Reserves (GIR) Less Gold vs.
Short-term Debts(US million)Philippines
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GDP per Capita Development.Philippines is
second to reach thee pre-crisis GDP/cap level
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Central Government Fiscal Balance as of
GDP..in manageable deficit (however not meeting
target figures), but
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External Debt as of GDP debt level is second
highest of Region
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Government Debt Situation
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Tax Revenue in of GNP (1991-2000
Average).amongst lowest in Region
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Tax Revenue in of GNP
GoP Plan
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Revenues Waived due to Tax Incentives in
billion Pesoshigh portion of special exemptions
since 1997
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Budget Support to Gov.owned Corporationsin
billion Pesos (1999)
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Foreign Direct Investmentin million.FDIs
are dwindling
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Real Gross Domestic Investment Growthworrying
level of investment
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Major Constraints for Philippine Economy

• Lackluster Growth
• High Population Growth
• High Unemployment
• Asset Ownership Distribution
• Savings Ratio
• Governance
• Low Performance of Agriculture Sector

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Long-term GNP Growth
Marcos Era
Post-Marcos Era
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Population Growthstill has the second largest
growth
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Annual Rate of Poverty Reduction1985-95
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Unemployment Rate ().highest in Region
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Savings Ratio in the 1990s.Philippines is
lowest
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Saving Ratio vs.GNP Growth.growth seems to
determine savings ratio
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Corporate Ownership Distribution in of Total
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Governance Indicators
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Performance of Philippine Agricultural Sectorin
of best practice in terms of yields per hectar
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GNP vs Agri Sector Growth
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Sources of ODA Loans
As of Dec 2000
Total 12.9 B
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Status of ODA Loansas of Dec 2000very
unsatisfactory Portfolio performance
Total 12.9b
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Scenario for the Philippines

• Fiscal deficit will be difficult to close
• Politically difficult to increase taxes
• Export may suffer to due slowdown of US economy
• Agriculture.next El Niño in sight
• Direct foreign investmentcompetition by other
  countries increasing

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10 Areas of special Attention..

• Improve investors confidence
• Accelerate sector reforms
• Achieve fiscal consolidation
• Broaden liberalization of economy
• Conserve remarkable export performance
• Exploit competitive advantages
• Enhance competitiveness
• Increase investment in rural areas
• Increase savings rate
• Improve implementation of ongoing investment

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Philippines Country Office
ADB-HQ, 1st Floor East Zone
Tel [phone]
Web www.adb.org
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Thank you very much