2016年-世界发展银行全球_Philippine_Economic_Update_October_2016___Outperforming_the_Region_and_Managing_the_Transition_56页_2mb

Philippines Economic Update Summary (October 2016)

Core Content

The Philippines Economic Update (October 2016) provides an overview of the country's economic performance and policy developments over the past six months, highlighting its resilience in the face of a weak global environment and outlining the challenges and opportunities for future growth.

Main Points

1. Economic Growth

• The Philippines grew at 6.9% year-on-year in the first half of 2016, outperforming regional peers such as China, Indonesia, Malaysia, Thailand, and Vietnam.
• Domestic demand and public investment were the main drivers of growth, with services and industry being the key contributors to the supply side.
• Agricultural output contracted by 3.3% due to the lingering effects of El Niño, while exports grew by 7.0% and imports by 19.9%, indicating a trade deficit.
• Net exports have contributed negatively to growth for six consecutive quarters, due to weak external demand and low commodity prices.

2. Financial Markets and Monetary Policy

• Credit growth was robust, especially to the real estate and construction sectors and households, contributing to the expansion of the economy.
• The credit-to-GDP ratio reached 45.7% in mid-2016, reflecting high domestic liquidity.
• Inflation remained low, with headline inflation averaging 1.4% and core inflation at 1.7% in the first seven months of 2016.
• The central bank lowered the key policy rate by 100 basis points to 3.0% in June 2016, as inflation remained under control.
• Nonperforming loans decreased slightly from 2.4% to 2.2%, and banks remained well capitalized, with a capital adequacy ratio of 16.0%, well above the regulatory minimum.

3. Fiscal Policy

• The new administration under President Duterte aimed to maintain fiscal sustainability while implementing an ambitious spending program.
• Public spending increased by over 10% in the first half of 2016, driven by election-related outlays and improved budget execution.
• The fiscal deficit reached 1.7% of GDP, reversing a budget surplus of 0.2% of GDP from the previous year.
• The deficit remained within statutory limits, and was primarily financed by domestic borrowing, contributing to a reduction in the debt-to-GDP ratio from 44.9% to 43.0%.

4. Employment and Poverty

• Unemployment declined steadily, with the annual GDP growth rate projected to exceed 6% for 2016–2018.
• Income growth among the poorest households outpaced the national average, reducing income inequality.
• Underemployment remained a persistent issue due to structural labor market problems.
• The government's social protection programs helped mitigate the impact of natural disasters.

5. Policy Transition and Challenges

• The Duterte administration is transitioning to a new economic policy framework, with a 10-point socioeconomic agenda to reinforce private sector confidence.
• The government is focused on tax reform, aiming to make the tax system more equitable and efficient.
• Tax reform includes evaluating the value-added tax (VAT) and petroleum excise taxes, with an emphasis on revenue mobilization and fiscal sustainability.

Key Policy Areas

1. Tax Reform

• The VAT has increased significantly since the 1980s, both in real terms and as a share of GDP.
• VAT efficiency has improved, and its distribution aligns with VAT-eligible spending.
• Removing VAT exemptions would reduce tax progressivity, especially for kerosene, diesel, and LNG.
• Excise tax rates on premium unleaded gasoline are low by international standards, and petroleum excise tax revenues have declined over the past decade.
• Wealthier households bear a larger share of the petroleum tax burden, and increased cash transfers could help offset the negative equity impact of tax reform.

2. Lending Targets

• Mandatory lending targets for agriculture and MSMEs have not been met by the banking sector, despite legal requirements.
• Lending to agriculture and MSMEs grew at much slower rates than the overall lending portfolio.
• Lending to micro and small enterprises stagnated at about 50% of the target level, highlighting the ineffectiveness of such policies.

Outlook and Risks

• The economic outlook is optimistic, with risks tilted to the upside.
• Macro stability and low inflation have created a favorable environment for sustained growth.
• Near-term risks include weak global recovery, low remittances, and slow progress in agricultural and manufacturing investment.
• Long-term risks involve external borrowing conditions tightening due to higher interest rates in the US and EU, and structural deficiencies in the business environment.
• Inclusive growth remains a major challenge, especially as the economy shifts toward skill- and capital-intensive production.

Conclusion

The Philippines has demonstrated resilience and growth potential despite a challenging global environment. The transition to a new administration and economic policy framework is expected to support continued growth and fiscal sustainability. However, policy implementation, reform effectiveness, and addressing structural issues will be critical to ensuring long-term economic stability and inclusive development.