2011年-世界发展银行全球_Philippines_Quarterly_Update_December_2011___Sustaining_Growth_in_Uncertain_Times_46页_4mb

2011 Philippines Quarterly Update Summary

Core Content

The Philippines Quarterly Update for December 2011 provides an overview of the country's economic and social developments, as well as policy changes, over the past three months. It evaluates the impact of these developments on the Philippines' growth outlook and highlights key findings from recent World Bank studies. The report is intended for policymakers, business leaders, financial market participants, and analysts.

Main Points

Economic Growth and Performance

• After a strong rebound in 2010, Philippine economic growth slowed significantly to 3.6% in the first three quarters of 2011, well below the government's revised target of 4.5–5.5% for the year.
• Q3 growth was 3.2%, driven by private consumption and inventory investment, which increased by 7.1% and 147.7%, respectively.
• Industrial and agricultural activities were sluggish, while the services sector continued to be the main growth driver, contributing 3 percentage points to GDP.
• Exports contracted by -14.8%, primarily due to weaker demand in advanced economies and public investment slowdown.
• Non-electronics and services exports performed better, growing by 23.8% and 8%, respectively, compensating for poor electronics export performance.

Employment and Poverty

• Employment quality remained poor, with unemployment at 6.4% and underemployment at 19.1% in the October labor force survey.
• Structural issues in the labor market limited the responsiveness of employment to economic growth.
• Poverty and hunger rose in September, with 10.4 million households self-rating themselves as poor and nearly one-fourth of the population experiencing hunger.
• Luzon (excluding the National Capital Region) saw the most significant increases in poverty and hunger due to typhoon damage and rising food prices.

External Accounts and Financial Markets

• Remittances grew by 7% to USD 16.5 billion, equivalent to 6.5% of GDP, continuing to fuel private consumption.
• Net foreign portfolio investments (FPI) increased to USD 3.4 billion in the first ten months of 2011, despite capital outflows in September.
• Foreign direct investment (FDI) remained weak at USD 671 million through September, due to risk aversion and a weak investment climate.
• Reserves reached USD 76.4 billion in November, up 25% from August, and can cover 11.2 months of imports.
• The Philippine peso strengthened due to improved macroeconomic fundamentals and credit rating upgrades, though speculative activity in the NDF market was curbed through regulatory measures.

Inflation and Monetary Policy

• CPI inflation averaged 4.8% through November, within the central bank's target range of 3–5%.
• Food inflation reached a peak of 6.2% in May due to floods in Northern Luzon, but slowed to 4.8% in November.
• Utility prices increased by 6.5% in October due to generation rate hikes and power supply disruptions, but normalization of supply led to a slowdown in November.
• Monetary policy remained accommodative, with interest rates unchanged in the second half of the year and reserve requirements raised to manage liquidity.
• The central bank introduced measures to curb speculative foreign exchange transactions, including higher capital charges on NDFs.

Fiscal Policy

• National government spending was weak in Q3, with a budget deficit of 0.8% of GDP through October, compared to 3% of GDP in the same period last year.
• Capital outlay was 30% below programmed levels, and PPP projects were stalled due to efficiency and cost reviews.
• A primary spending gap of 1.9% of GDP was recorded in Q3, with 56% attributed to lower capital spending.
• The government introduced a PHP 72 billion disbursement acceleration plan to ensure budgeted items are spent by year-end.
• Tax reforms were proposed, including raising excise taxes on alcohol and tobacco products, to increase revenue collection and reduce leakages.

Key Information

• Growth projections for 2011 and 2012 are 3.7% and 4.2%, respectively.
• The Philippines is well-positioned to handle global shocks due to strong macroeconomic fundamentals, regulatory reforms, and prudential measures.
• Remittances have shown counter-cyclical behavior, helping to insulate the economy from external imbalances.
• Financial sector stability is maintained, with non-performing loans and distressed assets remaining low.
• Capital adequacy ratio is above 15%, well within regulatory requirements.
• The services sector remains the main source of employment, accounting for 70% of new jobs in 2011.
• Structural reforms are needed to sustain growth above 5% in the medium to long term, including:
  • Improving revenue efficiency and equity through excise tax reforms.
  • Enhancing public spending quality and infrastructure investment.
  • Strengthening governance and reducing business costs.

Prospects

• Growth is expected to moderate in 2011 and accelerate slightly in 2012.
• Portfolio inflows are expected to remain strong, while FDI is projected to be moderate.
• Consumption will continue to drive growth due to strong remittances.
• The current account is projected to remain in healthy surplus, supported by remittances despite a widening trade deficit.
• Investment climate improvements and PPP program acceleration are expected to redirect the special deposit account (SDA) to productive uses.

Conclusion

The Philippines is navigating a period of economic uncertainty with moderate growth and improved macroeconomic fundamentals. While external shocks and policy reforms pose challenges, the resilience of the financial sector and remittances provide a buffer against economic downturns. Structural reforms are essential to sustain long-term growth, reduce poverty, and enhance competitiveness.