IN THIS ISSUE:

Latest Economic Performance:

The Philippines Gross National Income and Gross
Domestic Product

State of the National Economy:

Foreign Direct Investments, Inflation, Remittances
and Employment

Recent Economic Studies:

World Banks Doing Business Report, Consumer
and Business Outlook

economic
snapshots
QUICK FACTS AND FIGURES OF THE PHILIPPINE ECONOMY

QUARTERLY
 CURRENT
ECONOMIC1
SITUATION This issue will include the countrys most recent data on Gross Domestic Product, Foreign Direct Investments, Inflation,
Employment and Remittances, among others. In addition, World Banks Doing Business Report, Consumer
and Business Outlook for the Philippines are included in this report.
2 4th QUARTER ECONOMIC SNAPSHOTS
 Graph 1: Philippine GDP Growth Rates
(First Quarter 2010 Third Quarter 2014)
The Philippines gross domestic product (GDP) for the
first three quarters of 2014 slowed down to 5.3 percent,
notably the slowest growth achieved under the Aquino
administration since 2012. The recorded growth was lower
than the 6.4 percent from what was recorded in the previ-
ous quarter and 6.9 percent from the same quarter in 2013

Aside from the GDP, Gross national income (GNI) also de-
celerated by 4.8% in the third quarter of 2014 from 9.0%
in the same period last year.3 GNI mainly consists of remit-
tances of overseas Filipinos, which increased by 7 percent
in October 2014. This brought cumulative cash remittanc-
Source: National Statistical Coordination Board2
es for the period JanuaryOctober 2014 to US$19.9 billion,
higher by 6.2 percent.4 However, the Philippines still had
one of the fastest economic growth in the ASEAN region,
along with Vietnam and Malaysia. Indonesia, Thailand and Graph 2: Real GDP Growth Rate for Selected ASEAN Countries
Singapore posted relatively slower GDP growth compared (in percent)
to the Philippines.

This Quarters GDP growth also fell short of govern-

ments 2014 target of 6.57.5 percent. According to Na-
tional Economic and Development Authority (NEDA) Di-
rector General Arsenio M. Balisacan, the lower GDP growth
makes meeting even the lower range of the growth per-
cent target for 2014 a challenge6 but still remains optimis-
tic that the economy will be able to attain its 7-8 percent
growth target for 2015.
Source: Bangko Sentral ng Pilipinas5

ECONOMIC SNAPSHOTS 4th QUARTER 3

 The slow growth of the Philippine economy this Quarter is said to have been caused by the downtrend of 11, 1, 4 and 1 percent9 for 2010 to the Third Quarter
the services, industry and agriculture sectors. Data from the National Statistical Coordination Board (NSCB) of 2014. Output for this sector has been heavily af-
shows that the Services sector, although still the main driver of GDP, decelerated to 5.4 percent; while the fected by the recent typhoons that hit the country
Industry and Agriculture sectors likewise slowed down to 7.6 and 2.7 percent, respectively. last year.

Graph 3: Growth of Agriculture, Hunting, Forestry and Fishing, Industry Sector and Lastly, the Industry sector, in spite of a relatively
slower pace, has largely been boosted by Manufac-
Service Sector from First Quarter 2009 Third Quarter 2014
turing, whose growth the Federation of Philippine
(in million pesos)
Industries claims to have outpaced the global and
ASEAN average10. The Philippine government itself
has long aimed to revive and strengthen the manu-
facturing sector to generate employment and pro-
mote economic growth.

In spite of this relative slowdown, government is

still confident with the strength of other fundamen-
tal economic factors. NEDA Chief Balisacan even
cited positive projections for inflation rates, foreign
direct investments and the unemployment rates11.

On the demand side, GDP is still seen to be strong-

ly supported by consumption, even though having
slightly decreased during the Third Quarter, par-
Source: NSCB7 ticularly both the private and government spend-
ing. According to the Philippine Statistics Authority
(PSA), the deceleration of government consump-
In spite of governments policy agenda anchored on inclusive growth, the Agriculture sector, which has tion was due to the delays in the disbursement of
the most number of poor families, has yet to show a much more improved level of productivity. The NSCB major government expenditures for salaries and
says that this Quarters decline is the lowest since the Fourth Quarter of 20098, with annual growth rates at 6, wages as well as maintenance and other operating

4 4th QUARTER ECONOMIC SNAPSHOTS

expenses for the implementation of the programs and projects of the major sectoral departments.12 Under
government consumption, public construction also contracted by 6.2 percent but was offset by the acce-
leration in private construction investments by 15.7%.13

Graph 4: Growth Rates in Government Consumption

Source: Congressional Policy and Budget Research Department14

According to NEDA Chief Balisacan, the accelaration of infrastructure projects particularly in transport and
logistics will be one of the growth sources for 2015.

Inflation, a significant factor in private spending patterns especially with volatile prices of food and energy
items, was seen to have hiked for the past few months of 2014. In November 2014 however, BSP recorded
headline inflation having slowed down to 3.7 percent in from 4.3 percent in October.

Consumption is also seen to improve as boosted by the overall consumer outlook from -21.8 percent to 0.7
percent for the Fourth Quarter of 2014 and First Quarter of 2015, respectively. In the latest Consumer Outlook

ECONOMIC SNAPSHOTS 4th QUARTER 5

 report, the BSP report indicates that higher consumer confi-
dence is due to expectations of: (a) stable prices of commodi- Graph 5: Growth Rates in Electric Components
ties; (b) availability of more jobs and increase in the number of
employed family members; (c) good harvests; (d) additional
income/higher salary due to receipt of Christmas bonus and
13th month pay; and (e) brisker business activity leading to
higher household income. 15

Trade has also been on a favorable streak for the countrys

exports. Growth rates of 9.8 percent and 5.8 percent were re-
corded for the exports and imports, respectively. Export rev-
enue reached $5.173 billion in October 2014, a 2.9 percent
increase what was recorded a year ago but slower than what
was recorded in September 2014. For the first ten months of
2014, exports likewise recorded a 9.2 percent increase. Top Source: Congressional Policy and Budget Research Department17
commodities which grew in export sales were: machinery and
transport equipment; coconut oil; other manufactures; metal Fourth Quarter of 2014 also shows that a greater number of firms expected to hire new employees
components; and electronic products.16 The latter remained compared to those that expected to decrease the number of their current employees.
to be the countrys top export with a 49.1 percent share.
In spite of this, the Philippines attracted the least FDI according to the latest available data.
Meanwhile, total imports for October 2014 increased by 7.5
percent to $5.207 billion18 compared to what was registered Graph 6: Net Foreign Direct Investments for Selected ASEAN Countries
in October 2013. Cumulative imports for January to October (in million US dollars)
2014 likewise showed a positive increase of 4 percent. This in-
crease, according to the National Statistics Office (NSO) was
brought about by the positive performance of eight out of the
top ten major commodities for the month.

There also seems to be continued investor confidence in

the country. Foreign direct investments (FDI) doubled in Sep-
tember amounting to US$680 million in September 2014. FDI
inflows similarly grew by 61.3 percent to US$4.9 billion for the
first nine months of 2014,19 according to the Bangko Sentral
ng Pilipinas (BSP). Businesses outlook on the economy similar- Source: BSP 20
ly more upbeat with confidence index of 48.3 percent for the

6 4th QUARTER ECONOMIC SNAPSHOTS


Graph 7: Best Countries for Business for ASEAN
Source:Forbes22
Graph 8: East Asia & Pacific Economies Rankings on the Ease of Doing Business
Source: Doing Business 2015 24
In the latest Forbes Best Countries for Business List
for 2014, the country moved up to 82nd from 90th
place in the previous place, with improvements in
eight of out of 11 indicators: in terms of market per-
formance, innovation, monetary freedom, property
rights, technology, red tape, corruption and person-
al freedom21.
Affecting the countrys perceived competitive-
ness, the Philippines currently ranks 95th (from
108th in the report officially released in 2013) in the
latest Doing Business Report of the World Bank but
still ranks below Singapore, Malaysia, Thailand and
Vietnam. Declined rankings, according to the World
Bank, were in the areas of starting a business, pro-
tecting minority investors, paying taxes, and trading
across borders.23
This Quarters growth being predominantly been
private-sector led25, according to NEDA, shows
promising economic activity in sectors that can
generate employment for the people. Priority sec-
tors - agri-business, manufacturing, construction,
IT-BPM in the Next Wave Cities, logistics and tourism
-that have been identified in governments Philip-
pine Development Plan (PDP) Midterm Update are
likewise expected to push for economic growth and
generate employment.
In the Human Development Index (HDI) Report
of the United Nations Development Programme
(UNDP), the Philippines is currently ranked at 117th
out of 187 countries with an HDI value of .660, a
medium human development category. Between
1980 and 2013, the Philippines HDI value increased
ECONOMIC SNAPSHOTS 4th QUARTER 7
 Graph 9: Trends in the Philippines HDI Component Indices
(1980 2013)

Source: UNDP27

from 0.566 to 0.660, an increase of 16.5 percent or an average annual increase of about 0.46 percent, 26 ac-
cording to the UNDP report.

The Philippines has also shown relatively better HDI value results compared to other countries in the same
category.

In the latest Labor Force Survey (LFS) conducted by the NSO, unemployment rate decreased to 6 from 6.7
percent in the previous survey. Workers in the services sector, according to the NSO, had the largest propor-
tion of the population who are employed,28 making up 53.7 percent of the total workforce. This is followed
by the agriculture and industry sectors with shares of 30.8 and 15.6 percent, respectively. Unemployment,
still, was highest in the areas of Ilocos Region, Central Luzon and Cavite, Laguna, Batangas, Rizal at Quezon
(CALABARZON).

Improved unemployment rate was echoed by a better adult joblessness rate at 22.9 percent in the survey
conducted by the Social Weather Stations (SWS). The survey results also showed that a higher net optimism
on job availability score at +12 from +4 from their June survey. SWS classifies this score as % more jobs minus
% fewer jobs.29

8 4th QUARTER ECONOMIC SNAPSHOTS

 Graph 10: SWS Joblessness Rate and NSO Unemployment Rate in the Philippines
(September 1993 September 2014)

Source: SWS30
Furthermore, an SWS survey on poverty shows that 52 percent or an estimate of 11.4 million Filipino fami-
lies consider themselves as poor. The decline was observed in Balance Luzon but remained unchanged in in
Metro Manila, Visayas, and Mindanao.

Though this was notably below what was recorded in the September survey, the 2014 average of self-rated
poverty was not an improvement from the 2012 and 2013 average.

Graph 11: Self-Rated Poverty in the Philippines

(April 1983 to December 2014)

Source: SWS31

ECONOMIC SNAPSHOTS 4th QUARTER 9

 Graph 12: Expected Change in Quality of Life in Next 12 Months
(April 1984 to September 2014)

Source: SWS33
Another SWS survey on personal optimism and optimism about the economy indicates better expectations
from Filipinos. Unchanged at 31 percent, there are more optimists than pessimists that expect their personal
quality of life to improve in the next 12 months.32 This was particularly high in Metro Manila, Balance Luzon
and Mindanao areas.

Up by four points, 30 percent of the respondents were found by the survey to be optimistic about the Phil-
ippine economy in 2015. Increases were observed in Metro Manila, Balance Luzon and Mindanao areas. There
were less pessimists recorded for this survey as well.

Graph 13: Expected Change in the Philippine Economy

(September 1998 to September 2014)

Source: SWS34

10 4th QUARTER ECONOMIC SNAPSHOTS

ENDNOTES:

1
The STRATBASE Economic Snapshots is a quarterly publica-
tion that presents the current economic situation of the Philip-
pines through various economic indicators as monitored by lo-
cal and international financial institutions. This issue will include
the countrys most recent data on Gross Domestic Product,
Foreign Direct Investments, Inflation, Trade Balance and Remit-
tances, among others. In addition, surveys and studies on the
economic performance of and financial forecasts for the Philip-
pines are also offered in this report.
2
Raw data from the National Statistical Coordination Board
3
Congressional Policy and Budget Research Department,
House of Representatives. (December 2014). Third Quarter 2014
Philippine economic performance. Retrieved from: http://www.
congress.gov.ph/cpbo/images/PDF%20Attachments/Facts%20
in%20Figures/FF2014-50%203rd%20Qtr%20fINAL%201.pdf
4
Bangko Sentral ng Pilipinas. (December 2014). Personal re-
mittances hit US$2.5 billion in October 2014; January-October
level reaches US$22 billion. Retrieved from: http://www.bsp.gov.
ph/publications/media.asp?id=3621
5
Bangko Sentral ng Pilipinas. (December 2014). Selected eco-
nomic indicators: Asian countries (2010 2014). Retrieved from:
http://www.bsp.gov.ph/statistics/spei_new/tab48_sas.htm
6
Rappler. (2014, November 27). Philippine economy slows
down to 5.3% in Q3. Retrieved from: http://www.rappler.com/
business/economy-watch/76258-philippines-economy-gdp-
third-quarter-2014
7
National Statistical Coordination Board. (November 2014).
Gross national income and gross domestic product by industrial
origin: 2nd Qtr 2008 - 3rd Qtr 2014. Retrieved from: http://www.
nscb.gov.ph/secstat/d_accounts.asp
8
National Statistical Coordination Board (November 2014).
Philippine economy posts 5.3 percent GDP growth. Retrieved
from: http://www.nscb.gov.ph/sna/2014/3rd2014/2014qpr3.asp
1 1
Torres, T. (2014, December 6). NEDA chief remains optimis-
tic economy will grow 7-8% next year. Philippine Star. Retrieved
from: http://www.philstar.com/business/2014/12/06/1399456/
neda-chief-remains-optimistic-economy-will-grow-7-8-next-
year
12
Congressional Policy and Budget Research Department,
House of Representatives. (December 2014). Third Quarter 2014
Philippine economic performance. Retrieved from: http://www.
congress.gov.ph/cpbo/images/PDF%20Attachments/Facts%20
in%20Figures/FF2014-50%203rd%20Qtr%20fINAL%201.pdf
13
Ibid.
14
Ibid.
15
Bangko Sentral ng Pilipinas. (December 2014). Consumer ex-
pectations survey: Fourth Quarter 2014. Retrieved from: http://
www.bsp.gov.ph/downloads/Publications/2014/CES_4qtr2014.
pdf
16
National Statistics Office. (December 2014). Merchandise
exports performance: October 2014. Retrieved from: http://
web0.psa.gov.ph/content/merchandise-exports-performance-
october-2014
17
Congressional Policy and Budget Research Department,
House of Representatives. (December 2014). Third Quarter 2014
Philippine economic performance. Retrieved from: http://www.
congress.gov.ph/cpbo/images/PDF%20Attachments/Facts%20
in%20Figures/FF2014-50%203rd%20Qtr%20fINAL%201.pdf
18
National Statistics Office. (December 2014). External trade
performance: October 2014. Retrieved from: http://web0.psa.
gov.ph/content/external-trade-performance-october-2014
19
Bangko Sentral ng Pilipinas. (December 2014). Net foreign
direct investments more than doubled in September; first 9
months level reaches US$4.9 billion. Retrieved from: http://www.
bsp.gov.ph/publications/media.asp?id=3617
22
Forbes. (2014). Best countries for business. Retrieved
from: http://www.forbes.com/best-countries-for-business/
list/#page:1_sort:0_direction:asc_search:
23
Rappler. (2014, October 29). Philippines is 95th best place
to do business WB report. Retrieved from: http://www.rappler.
com/business/economy-watch/73429-philippines-ranking-do-
ing-business-report-2015
24
World Bank. (October 2014). Doing business 2015. Retrieved
from: www.worldbank.org
25
National Economic Development Authority. (2014, De-
cember 17). Statement of Secretary Balisacan at the 2014
year-end press briefing. Retrieved from: http://www.neda.gov.
ph/?p=4539
26
United Nations Development Programme. (2014). Sustain-
ing human progress: Reducing vulnerabilities and building re-
silience. Retrieved from: http://hdr.undp.org/sites/all/themes/
hdr_theme/country-notes/PHL.pdf
27
Ibid.
28
National Statistics Office. (December 2014). Employment
rate in October 2014 is estimated at 94.0 percent. Retrieved from:
http://web0.psa.gov.ph/content/employment-rate-october-
2014-estimated-940-percent
29
Social Weather Stations. (December 2014). Third Quarter
2014 Social Weather Survey on joblessness. Retrieved from:
http://www.sws.org.ph/pr20141208.htm
30
Ibid.
31
Social Weather Stations. (December 2014). Fourth Quar-
ter 2014 Social Weather Survey on self-rated poverty and self-
rated food poverty. Retrieved from: http://www.sws.org.ph/
pr20141229.htm
Social Weather Stations (November 2014). Third Quarter
32

2014 Social Weather Survey on personal and economic opti-

9
Raw data from the National Statistical Coordination Board
1 0
Desiderio, L. (2014, July 30). Phl mfg sector outpaces global
growth. Philippine Star. Retrieved from: http://www.philstar.
com/business/2014/07/30/1351736/phl-mfg-sector-outpaces-
global-growth
20
Bangko Sentral ng Pilipinas. (December 2014). Selected eco- mism. Retrieved from: http://www.sws.org.ph/pr20141127.htm
nomic indicators: Asian countries (2010 2014). Retrieved from:
http://www.bsp.gov.ph/statistics/spei_new/tab48_sas.htm 33
Ibid.
21
Desiderio, L. (2015, January 6). Philippine Star. Retrieved 34
Ibid.
from: http://www.philstar.com/headlines/2015/01/06/1409916/
best-nations-doing-business-phl-82nd

ECONOMIC SNAPSHOTS 4th QUARTER 11


STRATBASE RESEARCH INSTITUTE
9F 6780 Ayala Avenue, Makati City 1200
Vox 632.892.1751 Fax 632.892.1754
www.stratbase.com.ph
STRATBASE Economic Snaphshots
is a quarterly publication that presents the current
economic situation of the Philippines through various
economic indicators as monitored by local and international financial
institutions. This includes the countrys most recent data on Gross
Domestic Product, Foreign Direct Investments and Remittances,
among others. In addition, studies on the economic performance
of and financial forecasts for the Philippines
are included in this report.