2010年-世界发展银行全球_Philippines_Quarterly_Update_September_2010___Stepping_Up_Reforms_to_Sustain_Growth_32页_1mb

Philippines Quarterly Update Summary - September 2010

Core Content

This document provides a comprehensive overview of the Philippines' economic performance and policy developments from the first half of 2010 to early 2011, with a focus on the recovery from the global recession, structural reforms, and challenges to inclusive growth.

Main Points

Economic Recovery

• The Philippine economy showed a strong V-shaped recovery in 2010, driven by global trade rebound, increased investor and consumer confidence, and temporary domestic stimulus.
• Growth reached 7.8% in Q1 and was revised upwards to 7.9% in Q2, despite the negative impact of El Niño on agriculture.
• Manufacturing and construction were the main contributors to GDP growth, with manufacturing accounting for one third of the Q2 growth and construction growing by 23%.
• Exports returned to pre-crisis levels, and the book-to-bill ratio is positive, signaling continued growth momentum.

Monetary Policy

• Headline inflation remained well within the BSP's target zone, with a year-on-year rate of 3.5% in September 2010.
• The core inflation rate also moderated slightly to 3.8%.
• Monetary policy remained accommodative, with interest rates unchanged since December 2008.
• Strong capital inflows have complicated monetary policy as they could lead to asset price inflation or sudden stops.

Fiscal Policy

• The Aquino government emphasized spending efficiency, which helped reduce the fiscal deficit to within budget targets.
• The primary fiscal deficit grew by 0.5% of GDP in the first half of 2010, with two-thirds from increased spending and one-third from revenue shortfalls.
• Tax buoyancy has been weak, with revenue-eroding measures continuing to be implemented.
• The government debt reached 53.9% of GDP in June 2010, driven by stimulus measures and fiscal consolidation efforts.

Structural Reforms and Challenges

• The 2011 budget introduced significant structural reforms aimed at improving spending efficiency, transparency, and accountability.
• High informality and weak labor market performance remain structural challenges, with formal employment decreasing and underemployment still high.
• El Niño had a negative impact on poverty and inequality, as well as agricultural output and employment.
• Barriers to factor mobility across sectors and regions, along with unequal distribution of growth, are structurally limiting poverty reduction efforts.

Key Findings

Economic Performance

• The economy grew by 6.2% in 2010 and is expected to grow by 5% in 2011, with moderate risks.
• Investor confidence rose significantly in Q2, as shown in Table 1.
• Foreign investment increased, contributing to stock market growth and sovereign credit spread reductions.
• Reserve accumulation reached record highs, with international reserves hitting USD49.6 billion in August 2010.

Financial Markets

• The Philippine Stock Exchange Index (PSEi) reached a historical high of 4,000 in mid-September 2010.
• Foreign investors played a key role in the surge of financial markets.
• Sovereign spreads narrowed, and domestic yield curves flattened, indicating improved financial stability.

External Position

• The balance of payments remained in surplus, with current account surplus increasing to 5.6% of GDP in Q2.
• Remittances increased by 7.1% year-on-year in the year through July 2010, but real remittances fell due to peso appreciation and moderate inflation.
• External debt remained flat at 41% of GDP, but the share of long-term debt increased significantly.

Poverty and Inequality

• Despite economic growth, poverty and hunger incidence have not declined noticeably.
• El Niño had a detrimental effect on poverty, as shown in Special Focus #2.
• High and growing income inequality is a major issue, with unequal sectoral and regional distribution of growth contributing to weak poverty-growth elasticity.

Structural Impediments

• Informality and labor market weaknesses persist, with self-employed and unpaid family workers increasing.
• Factor mobility is limited, and social services and protection are inadequate, which hinders inclusive growth.
• Structural reforms are critical to ensure that growth benefits are widely shared.

Conclusion

The Philippines is recovering from the global recession with strong macro-financial resilience, driven by resilient remittances, robust exports, and improved investor confidence. However, inclusive growth and poverty reduction remain challenging due to structural weaknesses in the labor market, high informality, and unequal distribution of growth. The 2011 budget represents a turning point in public finance, with reforms aimed at spending efficiency, transparency, and accountability. Sustained and expanded efforts will be necessary to achieve long-term growth and reduce inequality.