GBT Presentation - Bank of Commerce

PERFORMANCE OF THE By Gary B.
Teves
PHILIPPINE ECONOMY 17 January 2020
PH Economy in the First 3 Quarters of 2019
 5.8% ave GDP growth QUARTERLY GDP GROWTH RATES (%)

10
 Infrastructure spending 9
down -13.6% 8
7
 Plant and equipment 6
investment dropped to -5% 5
4
 Exports up by only 3.4% vs. 3
13.2% in first 3 quarters of 2
2018 1
0
 Imports only grew 2.7% vs. 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19
1 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q 1Q
Q
17.1% in the first 3 quarters

of 2018
WWW.WALLACEBUSINESSFORUM.COM
BANK OF COMMERCE JAN. 10, 2020 2
PH Economy in the First 3 Quarters … 2
 Household consumption PH Economic Growth Summary (%)
sustained at 5.8% ITEM 1ST 1ST
 Industrial sector up by only 3Q19 3Q18
4.7% vs. 6.7% in 2018 GDP 5.8 6.2
 Agriculture improved by
Household consumption 5.8 5.7
1.5% in the first 3 quarters Gov’t Consumption 8.0 13.1
 Services up 6.9% vs. 6.8% in Fixed investment 1.3 14.6
the first 3 quarters Construction 8.8 12.1
Durable equipment -5.0 16.3
 Finance and trade up 9.8%
and 7.9%, respectively Export, goods & services
Import, goods & 3.4 13.2
services 2.7 17.1
Agriculture 1.5 0.5

Industry 4.7 6.7
Services 6.9 6.8
PH Economy in the First 3 Quarters … 3
GDP Growth in Selected Asian Countries (%)
COUNTRY Jan-Sept. Jan. Sept.

2019 2018
Vietnam 6.9 7
China 6.2 6.7
PHILIPPINES 5.8 6.2
Indonesia 5.1 5.2
Malaysia 4.6 4.7
Thailand 2.5 4.3
Singapore 0.6 3.8
Other Key Developments
Inflation rate (%)
 Macroeconomic stability, 8
7
economic fundamentals 6
strengthened 5
4
• Inflation hit 2.5% in 2019 3
• BOP back to a huge surplus 2
1
of $6.27 B from Jan-Nov. 0
from a deficit
S
J
J
J
J
M
M
18
19
20
20
• GIR rebuilding to 7.7 months
imports now Gross Int’l Reserves
88
• Gov’t finances remain 7.6
84
healthy as budget deficit 80
7.2
remains manageable at only 76 6.8
2.1% of GDP as of Nov. 2019 72 6.4
 Back to monetary relaxation as 68

J M M J S N J M M J S
6
18 19
inflation cools down. 20 20
$B Months Imports
Other Key Developments… 2
 Water and power supply issues created urgency on:
• Development of alternative water sources
• Creation of a Department of Water Resources
• Development of more baseload plants to a)
replace aging power plants; b) meet rising
energy demand; and c) raise reserves
 Priority economic reforms in latest SONA:
• TRAIN Package 2 or CITIRA
• TRAIN Packages 2+, 3, and 4
• National Land Use Act
• Reduce processing time of business permits
• and licenses
• Implement mitigation measures under
Rice Tariffication Law
FDIs Slipping
Net FDI ($B)
2014 2015 2016 2017 2018
Source: BSP
 FDIs down -32.8% from January-October 2019

• US-China trade conflict
FDIs Slipping… 2
 Domestic factors that affected PH’s net FDIs:

• Tax reform uncertainties
• Pause in manufacturing activity
• Slowdown in IT-BPM investments
 To arrest FDI slide:
• Enhance competitiveness of PH industry winners
• Sustain reforms that are beneficial to businesses
 Reasons for optimism:
• CITIRA issues nearing resolution
• Multinationals in PH still bullish and expanding
• FDI approvals by investment promotion agencies (IPAs)
increased 87.2% in the first 3 quarters of 2019.
CALABARZON: In the Spotlight
 CALABARZON: 7.3% GDP growth

in 2018
 Accounted for 17% share in the
national economy
 Population is 14.9 million in 2018
 Second highest GDP per capita at
P104,708.
 Industry Sector grew by 7.9%
 Services accelerated to 7.1%
 Agriculture rebounded to 0.7%
 Poverty incidence among families
in CALABARZON dropped to 5% in
2018
QRT ECO CHARTS JAN. 10, 2020 9
 CALABARZON will host some of the proposed major infrastructure

projects.
 Major infrastructure projects funded through PPP include:
Sangley
International
Airport
Photo Source: Philstar


projects.
LRT-Cavite
Extension
Project
LRT-6 Cavite
Line A – Phase
1 and 2
Photo Source: Build Build Build

projects.
Quezon-Bicol
Expressway
Photo Source: DPWH

projects.
Cavite-
Tagaytay-
Batangas
Expressway
Project
Photo Source: Rappler


projects.
Skyway Stage 3
Project
Photo Source: Business World

projects.
Preservation
and
Development
of Laguna de
Bay Project
Photo Source: Manila Bulletin

projects.
 Major infrastructure projects funded through ODA include:
North-South
Commuter
Railway
Project

projects.
 Major infrastructure projects funded through ODA include:
PNR South
Long Haul
Bataan-Cavite
Interlink
Bridge
National Economic Outlook, 2019-20 & Beyond
 Global uncertainties won’t

affect PH as much as its
neighbors
 Formidable market supported
by a huge productive
workforce
 Macroeconomic stability,
strong GIR, and low foreign
debt allow room for
sustainable liquidity growth
 Healthy fiscal position
resulting from tax reforms and
improved collection efficiency
Nat’l Economic Outlook… 2
 Reforms will continue,

beneficial to businesses.
 Manufacturing growth will

moderate to a respectable
pace.
 Agriculture will continue its

long-term growth trend of 2-
3%.
• Reforms are expected
from new DA leadership
Nat’l Economic Outlook… 3
 Services will be the main

economic driver this year
(supported by IT-BPM,
tourism, and consumer
spending).
 Industry will recover due to
bright outlook in public
and private construction.
 Build, Build, Build priority
list revised and expanded
to 100 projects
 29 new projects added
under PPP to fast-track
completion of projects.
Economic Forecast Summary
ITEM 2018 2019 2020 2020 2020
(LIKELY) (LOW) (HIGH)
GDP 6.2 6.0 6.3 5.5 7.0
Household spending 5.6 6.0 6.2 6.0 6.5

Government current expenses 12.8 8.1 6.7 6.5 7.0
Fixed investment 14.0 1.8 7.2 4.0 9.0
Export, goods & services 11.5 3.8 6.0 4.0 7.8
Import, goods and services 14.5 3.0 6.5 5.0 7.5
Agriculture 0.8 1.7 2.3 2.0 2.5

Industry 6.9 5.2 6.0 5.0 7.0
Services 6.6 7.0 7.1 6.5 7.5
P:$ Rate (Ave.) 52.7 51.8 52.0 53.0 51.0

Inflation (%, Ave.) 6.2 2.5 3.0 4.0 2.0
Bank Lending Rate (%, Ave.) 6.1 7.1 6.5 7.0 6.0
Note: Forecast as of January 2020
 GDP likely to sustain 6-6.3% growth in 2019/2020; 6-7% beyond.
 Inflation expected to settle near the mid-point of the BSP target
 More interest rate and reserve requirement cuts until next year
Economic Forecast Summary
ITEM 2018 2019 2020 2020 2020
(LIKELY) (LOW) (HIGH)
GDP 6.2 6.0 6.3 5.5 7.0
Household spending 5.6 6.0 6.2 6.0 6.5

Government current expenses 12.8 8.1 6.7 6.5 7.0
Fixed investment 14.0 1.8 7.2 4.0 9.0
Export, goods & services 11.5 3.8 6.0 4.0 7.8
Import, goods and services 14.5 3.0 6.5 5.0 7.5
Agriculture 0.8 1.7 2.3 2.0 2.5

Industry 6.9 5.2 6.0 5.0 7.0
Services 6.6 7.0 7.1 6.5 7.5
P:$ Rate (Ave.) 52.7 51.8 52.0 53.0 51.0

Inflation (%, Ave.) 6.2 2.5 3.0 4.0 2.0
Bank Lending Rate (%, Ave.) 6.1 7.1 6.5 7.0 6.0
Note: Forecast as of January 2020
 Modest peso depreciation expected in 2020
 PH’s fundamentals more robust, can withstand more global pressures
 Worst case scenario is 5.5% growth for the PH
PERFORMANCE OF THE By Gary B. Teves
PHILIPPINE ECONOMY 17 January 2020

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PERFORMANCE OF THE By Gary B.

 5.8% ave GDP growth QUARTERLY GDP GROWTH RATES (%)

17.1% in the first 3 quarters

Agriculture 1.5 0.5

GDP Growth in Selected Asian Countries (%)

COUNTRY Jan-Sept. Jan. Sept.

remains manageable at only 76 6.8

2.1% of GDP as of Nov. 2019 72 6.4

 Back to monetary relaxation as 68

Net FDI ($B)

2014 2015 2016 2017 2018

 FDIs down -32.8% from January-October 2019

 Domestic factors that affected PH’s net FDIs:

 CALABARZON: 7.3% GDP growth

 CALABARZON will host some of the proposed major infrastructure

Photo Source: Philstar

 CALABARZON will host some of the proposed major infrastructure

Photo Source: Build Build Build

 CALABARZON will host some of the proposed major infrastructure

Photo Source: DPWH

 CALABARZON will host some of the proposed major infrastructure

Photo Source: Rappler

 CALABARZON will host some of the proposed major infrastructure

Photo Source: Business World

 CALABARZON will host some of the proposed major infrastructure

Photo Source: Manila Bulletin

 CALABARZON will host some of the proposed major infrastructure

Photo Source: Build Build Build

 CALABARZON will host some of the proposed major infrastructure

 Global uncertainties won’t

 Reforms will continue,

 Manufacturing growth will

 Agriculture will continue its

 Services will be the main

Household spending 5.6 6.0 6.2 6.0 6.5

Agriculture 0.8 1.7 2.3 2.0 2.5

P:$ Rate (Ave.) 52.7 51.8 52.0 53.0 51.0

Household spending 5.6 6.0 6.2 6.0 6.5

Agriculture 0.8 1.7 2.3 2.0 2.5

P:$ Rate (Ave.) 52.7 51.8 52.0 53.0 51.0

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