IN THIS ISSUE:

Latest Economic Surveys:

Economic Optimism Surveys, Hunger, Employment
and Poverty Surveys

State of the National Economy:

Inflation, Foreign Trade Export & Imports, Foreign Direct
Investments, and Foreign Portfolio Investments

Recent Economic Studies:

Business Expectations Survey, Outlook and Recommendations

economic
snapshots
QUICK FACTS AND FIGURES OF THE PHILIPPINE ECONOMY

QUARTERLY
 CURRENT
ECONOMIC
SITUATION
This issue will include 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 also offered in this report.
2 1st QUARTER ECONOMIC SNAPSHOTS
ECONOMIC PERFORMANCE OF THE PHILIPPINES
Figure 1: Fourth Quarter Domestic Product
Below are the findings on the economic performance (Growth Rates, 2011 2013)
of the Philippines by the National Statistical Coordination
Board and the National Economic Development Author-
ity.

Highlights of First Quarter 2014:

Philippine Economic Growth Towards
an Upward Growth Trajectory

The Philippine economy grew by 7.2 percent in 2013 (6.6

in 2012), higher than the governments target of 6 percent
to 7 percent. Meanwhile, the economy grew by 6.5 per-
cent in the Fourth Quarter of 2013. Despite revised growth
prospects because of Typhoon Haiyan, the Philippines was
still considered as one of the best performing economies
in the Asian region, second only to China, which grew by
7.7 percent.
Data from the National Statistics Coordination Board
(NSCB) show that the growth was driven by the Services
sector, particularly, Trade and Real Estate, Renting & Busi-
ness Activities. Growth in the industry sector was driven
by manufacturing, which grew 12.5 percent2 in 2013. To-
gether with manufacturing, construction is expected to
register annual growth of approximately 10 percent. This
can be attributed to the rising percentage of the govern-
ment budget on infrastructure. This, according to the De-
Source: NSCB1
partment of Budget and Management (DBM),
may reach $8.99 billion or 3.1 percent of the
GDP for 2014, which is 37.2 percent higher
than in 20133 .
In fact, the Philippines continues to enjoy a
favourable economic position primarily attrib-
uted to macroeconomic fundamentals and
political stability through good governance.
According to governments latest Philippine
Development Plan (PDP), these factors fuel
positive expectations that lead to growth.4
The PDP likewise reported that the country
is on track in meeting its projected 6.5 7.5
growth this year and 7 8 percent GDP growth
by 2016.
Poverty incidence even improved for the
First Semester of 2013 at 24.9 percent based
on the 2013 Annual Poverty Indicators Survey
(APIS) recently conducted. Despite the govern-
ments retargeted poverty incidence at 18 20
percent, this was still a notable improvement
from the 27.9 percent generated from the
2012 Family Income and Expenditure Survey
(FIES) 5.

ECONOMIC SNAPSHOTS 1st QUARTER 3

 Figure 2: International Rating Agencies and their Current Ratings of the Philippines

Moreover in recognition to the countrys economic perfor-

mance, international credit rating agency Standard & Poors
(S&P) recently announced a fresh rating upgrade for the Phil-
ippines, its highest credit rating in history and the best grade
the Philippines has ever received from any of the three major
credit rating agencies. 6

Gains in revenue generation, spending efficiency and

improvements in public debt profile and the investment
environment countrys strong external liquidity and inter-
national investment position coupled with an effective mon-
etary policy framework were cited by the international credit
rating agency as factors that led to the countrys rating up-
grade.

From the previous rating of BBB-, the Philippines is now rat-

ed at BBB, just a notch above minimum investment grade for
its long-term sovereign credit rating. According to S&P, it ex-
pects structural, administrative, institutional and governance
reforms that had initially paved the way for the countrys
economic boom, to sustain its effects even beyond President
Aquinos term.

Source:Bangko Sentral ng Pilipinas 7

4 1st QUARTER ECONOMIC SNAPSHOTS

ECONOMIC INDICATORS
Figure 3: Low and Stable Inflation in the Philippines
Discussed below are some of the relevant eco-
nomic indicators which serve as statistics about the
Philippine economic performance.

Inflation

Inflation slowed down to 3.9 percent in March

2014. According to the Bangko Sentral ng Pilipinas
(BSP), this was still within the governments forecast
range of 3.7-4.6 percent for the month8. However, it
was recently reported that inflation rate increased
to 4.1 percent in Q1 2014 from 3.4 percent in the
previous quarter9 which was still within govern-
ments target range for the year. Source: NEDA10

According to the Philippine Statistics Authority,

this can be attributed to slower increases in prices Figure 4: Philippine Trade Performances
of housing, water, electricity, gas, and other fuels11. (February 2013and 2014)
And this year, government targets inflation to aver-
age 4.5 percent.

Foreign Trade: Exports and Imports

The balance of trade in goods (BOT-G) in Febru-

ary 2014 registered a deficit of $66 million from $967
million deficit in the same period last year. 12

NSO data reveals that total exports increased by

24.4 percent to $4.654 billion in February 2014 while
total imports amounted to $4.721 billion, represent-
ing a 0.3 percent increase from what was recorded
during the same period a year ago. Source: National Statistics Office13

ECONOMIC SNAPSHOTS 1st QUARTER 5

 Electronic Products, according to NSO, remained as the countrys top export with total of $1.880 billion. It Foreign Direct Investments
accounts for 40.4 percent share of the total exports revenue in February 2014. Other major export commodi-
ties were other mineral products, machinery and transport equipment, chemicals, woodcrafts and furniture, Foreign direct investments (FDI) in 2013 increased
and other manufactures.14 by 20 percent to US$3.9 billion from US$3.2 billion
in 2012, supported by the investors confidence on
the countrys sound macroeconomic fundamentals.
And by January 2014, data from the BSP showed
Figure 5: Foreign Direct Investment in the Philippines
that FDI improved by 5.3 percent to US$1 billion.
(in Million US dollars)

The bulk of investments were channeled mainly

to financial and insurance; wholesale and retail
trade; real estate; manufacturing and information
and communication activities.16

Foreign Portfolio Investments

Latest data from the BSP show that foreign portfo-

lio investments (FPI) gained a 42.7 percent growth,
reaching US$2.1 billion for March 2014. The top 5 in-
vestor countries for the month, with a share of 79.7
percent, were the US, the United Kingdom, Singa-
pore, Luxembourg, and Malaysia.

FPI outflows17 for the month also increased by

40.7 percent to US$2.2 billion from last months re-
cords. The BSP explained that this was because of
positive investor reaction to the Federal Reserves
announcement to maintain its current monetary
policy coupled with better-than-expected March
inflation rate for the Philippines.18
Source:BSP15

6 1st QUARTER ECONOMIC SNAPSHOTS

 Figure 6: Overseas Filipinos Remittances
(January 2009 January 2014)
Source: BSP20
Figure 7: National Government Outstanding Debt as of December 2013
(In Million Pesos)
Source: BoT22
Remittances
In January 2014, remittances increased by 5.9 per-
cent to US$1.8 billion from US$2.2 billion recorded
a month ago in December 2013. The BSP explained,
however, that the level of remittances typically
drops after the year-end holiday season19.
Meanwhile for the full year of 2013, remittances
posted a 6.4 percent increase, reaching US$22.8 bil-
lion and exceeding the BSPs projection of 5 percent
growth for the year. The solid growth of remittances
from Overseas Filipinos remains supportive of eco-
nomic activity, with remittances accounting for 8.4
percent of the countrys GDP in 2013.
National Reserve: Debt
Data released by the Bureau of Treasury (BoT)
showed that governments debt reached P5.628
trillion in March this year, higher by 6.6 percent
compared with P5.281 trillion in the same month in
201321. Furthermore, as shown in the figure below,
its share in the countrys GDP declined to 49.2 per-
cent in 2013.
The Governments debt is seen to breach the
6-trillion-peso mark, hitting P6.322 trillion ($142.07
billion), 23 according to the Philippines Budget of Ex-
penditures and Sources of Financing for 2014.
ECONOMIC SNAPSHOTS 1st QUARTER 7
 ECONOMIC SURVEYS Figure 8: Degree of Hunger in Households in the Philippines
(July 1998 to December 2013)
Below are surveys from the Social Weather Sta-
tions (SWS) which cover the governments econom-
ic and social targets such as employment, hunger
and poverty; and Pulse Asia on the state of the na-
tional economy.

Fourth Quarter 2013 SWS Survey

on Hunger
Source: SWS25
The SWS survey on hunger conducted in Decem-
ber 2013 found that 18.1% or an estimated 3.90 mil-
lion families experiencing are involuntary hunger at Figure 9: Incidence of Hunger in Households by Location
least once in the past three months. 24 This result (July 1998 to December 2013)
was higher than the 17.9 percent posted in Septem-
ber 2013.

Meanwhile, overall hunger declined in Mindanao,

Balance Luzon at 19.7 and 15.7 percent, respectively;
increased in Visayas to 17.5 percent; and stayed the
same in Metro Manila at 24.3 percent.

Lastly, the countrys average hunger rate for 2013

was 19.5 percent, marginally lower than the 2012 av-
erage of 19.9 percent.
Source: SWS26

8 1st QUARTER ECONOMIC SNAPSHOTS

Fourth Quarter 2013 SWS Survey
Figure 10: SWS Joblessness Rate and NSO Unemployment Rate in the Philippines
on Employment (September 1993 December 2013)

The SWS survey on employment conducted in

December 2013 revealed that adult joblessness was
at 27.5 percent, or an estimated 12.1 million, higher
than 21.7 percent posted in September 2013.

By age group, joblessness increased among those

aged 35-44, 25-34 year; and 45 years old and above.
However, joblessness among 18-24 (youth) age
group remained the highest at 52.3 percent.

On the other hand, the same survey also showed Source: SWS27
that optimism about job availability was rated as
fair at 40 percent and 15 points above the medio-
cre28 rating in September 2013.
Figure 11: Expected Change in the Philippine Economy
(September 1998 to December 2013)
Fourth Quarter 2013 SWS Survey
on Economic Optimism

The latest SWS survey on economic optimism

showed that 30 percent were optimistic that the
Philippine economy would get better, although
slightly lower than what was recorded in Septem-
ber 2013.

Net Optimism about the Economy was very high

in class ABC and Balance Luzon, and high for the rest
of the classes and areas,30 SWS added. Source: SWS29

ECONOMIC SNAPSHOTS 1st QUARTER 9

 Pulse Asia Nationwide Survey on the State of the National Economy

According to the results of Pulse Asias survey, one out of every two Filipinos (50%) says the state of the national econo-
my deteriorated in the past 12 months; most of those expressing this view (62%) were strongly affected by such economic
deterioration while almost the same percentage of those saying that economy improved year-on-year (11%) were some-
what affected by such growth (61%).31

Perception of economic deterioration was mostly felt in the Visayas, Mindanao, and by Class D; while it remained un-
changed in Metro Manila, the rest of Luzon, and for Classes ABC and E.

Figure 12: State of the National Economy Now Compared to Last Year
(March to December 2013)

Source: Pulse Asia32

10 1st QUARTER ECONOMIC SNAPSHOTS

ECONOMIC STUDIES

The Philippines continues to be a rising economic player in the Figure 13: Enabling Trade Index 2014: Philippines Country Report
Southeast Asian region because of its high and strong economic
growth, despite much-needed improvements in some aspects of
governance and infrastructure. It continues to receive desirable out-
looks from the private sector but has yet to reap enough economic
benefits to achieve its social targets and its long-coveted inclusive
growth.

The economic surveys and studies that will be discussed below will
include the economic situation and growth forecasts of the Philip-
pines and its growth-contributing factors.

World Economic Forums

Global Enabling Trade Report 2014

The Philippines advanced eight notches in the WEFs enabling trade

index, ranking 64th of 138 economies from 72nd of 132 economies in
2012. The country trailed behind Singapore, Malaysia, Thailand and Source: WEF34
Indonesia, but placed higher than Vietnam, Cambodia, Lao DPR and
Myanmar 33 the report added. also contributing to weakening the general operating environment (82nd)35.

According to the report, the country performed well on the do- However, much can be improved with respect to the other five pillars36 of the index. The
mestic market access (19th) and foreign market access (26th) pillars. lack of adequate transport infrastructure (96th), most especially airport (105th) and port (107th)
On the other hand, WEF reported that that border administration in infrastructure remain to be a weakness for the country. The availability and quality of logistics
the country (71st) is mired by corruption and red tape, two factors services were also described by WEF as largely insufficient (84th).

ECONOMIC SNAPSHOTS 1st QUARTER 11

 BSPs Business Expectations Survey

The latest Business Expectations Survey, conducted by the BSP, indicated that outlook on the economy
continued to be optimistic for the First Quarter 2014, with overall confidence index (CI) at 37.8 percent. The
current quarters CI was lower, however, compared to the 52.3 percent CI recorded in the Q4 2013 survey, 37
BSP elaborated.
Business outlook turned more optimistic for the Second Quarter, with CI at 50.8. According to the report,
this was largely due to the following factors: (a) anticipated increase in demand during the secondary har-
vest season, graduation and enrollment periods, and summer season (with the expected influx of both local
and foreign tourists), (b) brisker business arising from companies improved marketing strategies, and (c) new
construction projects (public and private), boosted by rehabilitation efforts from Typhoon Yolanda39.

Albeit in a declining trend, there were two business constraints identified in the report: domestic competi-
tion (57.9 percent) and insufficient demand (leading to low sales volume, 31.6 percent)40.

Figure 14: Overall Business Confidence Index

(Q2 2001 Q1 2014)

Source: Doing Business 2014 Report38

12 1st QUARTER ECONOMIC SNAPSHOTS

ENDNOTES:

1
National Statistics Coordination Board. (January 2014). Phil-
ippine economy grew by 7.2 percent in 2013;
6.5 percent in Q4 2013. Retrieved from: http://www.nscb.gov.
ph/sna/2013/4th2013/2013qpr4.asp
2
Villegas, B. (2014. February 11). 8% GDP growth is possible.
Manila Bulletin. Retrieved from: https://ph.news.yahoo.com/8-
gdp-growth-possible-180032878.html
3
Philippine Star. (2014, February 13). Phl to hike 2014 infra-
structure spending by 37.2 pct. Retrieved from: http://www.
philstar.com/business/2014/02/13/1290174/phl-hike-2014-in-
frastructure-spending-37.2-pct
4
National Economic Development Authority. (February
2014). The Philippine economy: Progress, challenges, strategies.
Retrieved from: http://www.neda.gov.ph/
5
National Economic Development Authority. (April 2014).
Poverty incidence among filipinos registered at 24.9%, as of First
Semester of 2013 PSA. Retrieved from: http://www.nscb.gov. 18
ph/pressreleases/2014/PSA-NSCB-PR-201404-SS2-09_poverty-
incidence.asp#sthash.WD7A1Ksg.dpuf
6
Montecillo, P. (2014, May 9). PH credit rating upgraded. Phil-
ippine Daily Inquirer. Retrieved from: http://business.inquirer.
net/170026/ph-credit-rating-upgraded
7
Bangko Sentral ng Pilipinas & Investor Relations Office.
(2014, May 8). Joint statement of Bangko Sentral ng Pilipinas and
the Investor Relations Office. Retrevied from: http://www.gov.
ph/2014/05/08/joint-statement-bsp-iro-on-standard-poors-
credit-rating-upgrade/
8
Bangko Sentral ng Pilipinas. (April 2014). Inflation deceler-
ates further to 3.9 percent in March. Retrieved from: http://www.
bsp.gov.ph/publications/media.asp?id=3393
9
Bangko Sentral ng Pilipinas. (April 2014). Inflation rises in Q1
2014 but remains within target. Retrieved from: http://www.bsp.
gov.ph/publications/media.asp?id=3401
10
National Economic Development Authority. (February
2014). The Philippine economy: Progress, challenges, strategies.
Retrieved from: http://www.neda.gov.ph/
11
Martin, K. (2014, April 5). Inflation eases to 3.9% in March.
Philippine Star. Retrieved from: http://www.philstar.com/busi-
ness/2014/04/05/1308886/inflation-eases-3.9-march
12
National Statistics Office. (April 2014). External trade perfor-
mance : February 2014. Retrieved from: http://www.census.gov.
ph/content/external-trade-performance-february-2014
13
Ibid.
14
National Statistics Office. (April 2014). Merchandise export
performance: February 2014. Retrieved from: http://www.cen-
sus.gov.ph/content/merchandise-export-performance-febru-
ary-2014
15
Bangko Sentral ng Pilipinas. (April 2014). Foreign direct in-
vestments inflows reach US$1 billion in January 2014. Retrieved
from: http://www.bsp.gov.ph/publications/media.asp?id=3396
16
Ibid.
17
Bangko Sentral ng Pilipinas. (April 2014). Foreign portfolio
investments rise in March. Retrieved from: http://www.bsp.gov.
ph/publications/media.asp?id=3400
Ibid.
19
Bangko Sentral ng Pilipinas. (March 2014). Personal remittanc-
es register solid growth in January 2014. Retrieved from: http://
www.bsp.gov.ph/publications/media.asp?id=3385&yr=2014
20
Ibid.
21
Leyco, C. (2014, May 5). NG debt reaches P5.6 trillion in
March. Manila Bulletin. Retrieved from: http://www.mb.com.ph/
ng-debt-reaches-p5-6-trillion-in-march/
22
Bureau of Treasury. (January 2014). National government
outstanding debt as of December 2013. Retrieved from: http://
www.treasury.gov.ph/wp-content/uploads/2014/04/mo_
ngoutstandingdebt8.pdf
23
Philippine Star. (2014, Febrary 18). Govt debt jumps to 37
$127.67 B in 2013. Retrieved from: http://www.philstar.com/
business/2014/02/18/1291997/govt-debt-jumps-127.67-b-2013
24
Social Weather Stations. (January 2014). Fourth quarter 2013
Social Weather Survey on hunger. Retrieved from: http://www.
sws.org.ph/pr20140122.htm
25
Ibid.
26
Ibid.
27
Social Weather Stations. (February 2014). Fourth quarter
2013 Social Weather Survey on employment. Retrieved from:
http://www.sws.org.ph/pr20140212.htm
28
Ibid.
29
Social Weather Stations. (February 2014). Fourth quarter
2013 Social Weather Survey on economic optimism. Retrieved
from: http://www.sws.org.ph/pr20140226.htm
30
Ibid.
31
Pulse Asia Research, Inc. (December 2013). Pulse Asia re-
searchs December 2013 nationwide survey on quality of life and
state of the national economy. Retrieved from: www.pulseasia.
ph/
32
Ibid.
33
Remo, A. (2014, April 3). PH improves standing as world
trade destination. Philippine Daily Inquirer. Retrieved from:
http://business.inquirer.net/167532/ph-improves-standing-as-
world-trade-destination
34
World Economic Forum. (April 2014). The global enabling
trade report 2014. Retrieved from: www.weforum.org
35
Remo, A. (2014, April 3). PH improves standing as world
trade destination. Philippine Daily Inquirer. Retrieved from:
http://business.inquirer.net/167532/ph-improves-standing-as-
world-trade-destination
36
This study was organized in seven specific pillars: domestic
market access; foreign market access; efficiency and transparen-
cy of border administration; availability and quality of transport
infrastructure; availability and quality of transport services; avail-
ability and use of ICTs; and operating environment.
Bangko Sentral ng Pilipinas. (March 2014). Business expecta-
tions survey: First quarter 2014. Retrieved from: http://www.bsp.
gov.ph/
38
Ibid.
39
Ibid.
40
Ibid.

ECONOMIC SNAPSHOTS 1st QUARTER 13


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 have
been offered in this report.