LONG VERSION_FIRST DRAFT_JUNE 22

PH Economic Situation
and Outlook
Gary B. Teves

Presentation to the Bank of Commerce

June 28, 2022

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 PH Economic Situation
 The Philippine economy posted growth in 4 straight quarters, including 8.3% in
1Q22, despite the reimposition of a lockdown in January due to the Omicron
variant.
 Domestic demand-driven recovery: household spending up 10.1% in the first
quarter. This is due to “revenge” shopping, dining, travel as restrictions ease in
February.
 Gov’t spending only grew by 3.6% in 1Q primarily due to the election spending
ban.
 Exports accelerated (10.3%) driven by electronic products, coconut oil, and
tropical fruits such as bananas and mangoes.
 But imports rose faster (15.6%) due to demand for petroleum and
pharmaceutical products.
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 PH Economic Situation
 In the supply side, Industry grew by 10.4%.
 This is driven by manufacturing sector particularly of food products (9.4%),
chemicals (19.7%), and pharmaceutical products (52.2%).
 Construction (13.5%) and Mining (17%) also registered growth in this period.
 Services rose by 8.6% during the period.
 Hotels and restaurants (21%), and transport (26.5%) are starting to recover.
 Financial and insurance activities (7.2%), as well as information and
communication (7.7%) continue to perform well.
 Meanwhile, Agriculture only posted 0.2% growth
 This is due to unresolved African Swine Fever and low crop production brought
by high oil and fertilizer prices.

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 PH Economic Growth Summary (%)
1Q22 1Q21 2021 2020
GROSS DOMESTIC PRODUCT (GDP) 8.3 -3.8 5.7 -9.5
Household final consumption expenditure 10.1 -4.8 4.2 -8.0
Government final consumption expenditure 3.6 16.1 7.1 10.5
Fixed investment 11.0 -18.2 9.9 -27.3
Export of goods and services 10.3 -8.4 8.0 -16.1
Import of goods and services 15.6 -7.5 13.0 -21.6

Agriculture, fishery and forestry 0.2 -1.3 -0.3 -0.2

Industry 10.4 -4.2 8.5 -13.1
Services 8.6 -4.0 5.4 -9.1

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 Other Economic Indicators
 INFLATION. PH inflation rate reached 5.4% in May 2022, the highest
since November 2018. This brought average inflation from Jan-May at
4.1%. The soaring prices are primarily driven by the ff:
 Impact on world oil and commodity prices of the Russia-Ukraine war which
affects net oil importing countries such as PH
 Constraints in production inputs and consumer goods imports due to lockdowns
in China
 Global supply chain disruptions of food and raw materials due to export bans of
some countries

 We see inflation rising to an average of 5-6% in 2022.

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 Other Economic Indicators
 DEBT. Total national debt reached Php 12.76 trillion as of end-April, 63.5% of GDP.
This is above the internationally accepted level of 60%.
 The debt level is still manageable given the need to secure resources to finance pandemic
response programs. These include providing social protection to the vulnerable sectors
through “ayuda”, procurement of vaccines, and beefing up the capacity of the health sector.
 Foreign debt only accounted for 30% of total debt to minimize the impact of foreign
exchange fluctuations.
 BUDGET DEFICIT. PH budget deficit stood at Php -1 .6 trillion, equivalent to 8.6%
of GDP as of end-2021.
 Public expenditures exceeded revenues due to the huge spending requirement needed to
fight the pandemic and help the country recover.
 Meanwhile, gov’t revenues weakened due to lower level of tax collection as people lost their
jobs and businesses closed down.

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