Philippines: Current Economic Conditions

Philippines - Real GDP Growth

1990 Prices • The Philippines is facing recession. Real GDP
Percent Change, Year Ago
growth for 1998 is estimated to be -1.6%.
8
• Both equities and the exchange rate have been hit
6 since mid-1997 by the Asian crisis.
• The Philippine stock exchange fell 47.7% between
4 March and September of 1998.

2
• Interest rates fell in 1998 as the peso slightly
rebounded.
0

-2
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: IFS

Philippines - Inflation Rate Philippines - Short-Term Interest Rate

Consumer Price Index 3 Month Interbank Rate
Percent Change, Year Ago Percent
25 35

30
20

25
15
20
10
15

5
10

0 5
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: IFS Source: Datastream

Philippines - Exchange Rate Philippines - Equity Index

Pesos per US Dollar Philippines Composite Index
PP/US$ Index
20 3500

3000
25

2500
30
2000
35
1500

40
1000

45 500
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: IFS Source: Bloomberg

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 Philippines: Current Economic Conditions
Philippines - Official Reserves
Total Reserves Minus Gold and as Percent of GDP
US$ Billions Percent • Official reserves climbed to $11.8 billion in January
12 20 1998, after the government sold $1 billion in bonds
Reserves Minus Gold - L
Reserves as % of GDP - R abroad.
10
15 • The unemployment rate dropped in 1998, despite the
8 decline in total output.
• The government budget balance was a decreasing
6 10
percent of GDP in 1997.
4 • The narrowing the trade gap will allow the current
5 account gap to approach equilibrium.
2

0 0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Sources: IFS; Milken Institute

Philippines - Current Account Balance Philippines - Industrial Production

As Percent of GDP Industrial Production
Percent Percent Change, Year Ago
2 30

0
20

-2
10
-4
0
-6

-10
-8

-10 -20
80 82 84 86 88 90 92 94 96 98 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: Datastream Source: WEFA

Philippines - Unemployment Rate Philippines - Budget Balance

Seasonally Adjusted Government Surplus/Deficit as Percent of GDP
Percent Percent
11 2

1
10
0

9 -1

-2
8
-3

7 -4
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: Datastream Source: Datastream

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 Philippines: International Trade
Philippines - Composition of Exports
1997 • Machinery and transport equipment account for 40%
Raw materials of the Philippines’ exports.
Food, drink & 4%
Other • The Philippines’ exports are increasingly capital and
tobacco 2% technology-intensive goods.
4%
• Trade with Asia and with the United States is
Chemical
products Machinery & extremely important for the Philippines.
10% transport equip. • The trade deficit has improved slightly in 1998, still a
40% large concern for the Philippine government. It is the
Consumer
manufact. easiest method for the country to exit from its severe
14% economic recession.
Intermediate
manufact.
26%
So urce: Eco no mist Intelligence Unit

Philippines - Composition of Imports Philippines - Trade Balance

1997 Merchandise Exports, Imports, and Balance
US$ Billions
Parts for 4
Exports
manufacture of Imports
electrical 3 Trade Balance
equipment
Other 2
18%
38%
Telecomm. 1
equipment
0
15%
Semi-
-1
processed
Mineral fuels manufactures
Power -2
8% 11% 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
generation Source: IFS
equipment
So urce: Eco no mist Intelligence Unit 10%
Philippines - Destination of Exports Philippines - Composition of Imports
1997 1997

Other Other
27% 27% US
34%
US
UK 34% UK
4% 4%
Hong Kong Hong Kong
5% 5%
Japan Singapore Japan
Singapore
Netherlands 17% 6% Netherlands 17%
6%
7% 7%
So urce: Eco no mist Intelligence Unit So urce: Eco no mist Intelligence Unit

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 Philippines: Finance
Philippines - Foreign Direct Investment
Foreign Investment Flows • Foreign direct investment is far below the high 1996
US$ Billions
and mid-1997 levels.
0.8
• Portfolio investment suffered in 1997 as all
0.6
investment, both domestic and foreign, fell at the
0.4 beginning of the recession.
0.2 • Government debt is significantly higher in 1998 –
more than 80% of GDP.
-0.0
• Foreign debt is also high. Both the public and the
-0.2
private sector have been borrowing to repay loans.
-0.4

-0.6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: IFS

Philippines - Portfolio Investment Philippines - Foreign Debt Service Due

Inflows and Outflows As Percent of GDP
US$ Billions Percent
2.0 12
Inflows into the Philippines
Outflows from the Philippines
1.5 11

1.0 10

0.5 9

0.0 8

-0.5 7

-1.0 6
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: IFS Source: Datastream

Philippines - Foreign Debt Philippines - Government Debt

As Percent of GDP As Percent of GDP
Percent Percent
75 100

70
90

65
80
60
70
55

60
50

45 50
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: Datastream Source: Datastream

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 Philippines: Sectors of the Economy
Philippines - Sectors of the Economy
1997 • The Philippines is one of the world’s largest
exporters of labor. Filipinos working abroad account
Agriculture,
for nearly 10% of GDP.
Other forestry &
3% fishing • The Philippines has experienced economic slowdown
19% across all output sectors. Manufacturing,
Government & construction, and agricultural sectors have been hit
other services hardest.
32% Manufacturing • Agricultural output fell drastically in 1997 due to a
22% drought.
Construction • Agriculture, manufacturing and construction made up
Commerce 6% 47% of GDP in 1997.
13% Transport &
comm.
5%
So urce: Eco no mist Intelligence Unit

Philippines - Remittances From Abroad Philippines - Output

Workers' Remittances as Percent of GDP Agriculture, Fishery, and Forestry Sectors
Percent Percent Change, Year Ago
10 10

5
8

0
6
-5

4
-10

2 -15
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: WEFA Source: WEFA

Philippines - Output Philippines - Output

Manufacturing Sector Construction Sector
Percent Change, Year Ago Percent Change, Year Ago
10 30

20
5

10
0
0

-5
-10

-10 -20
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: WEFA Source: WEFA

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 Philippines: Trade and Finance
Philippines - Role of Trade
Exports and Imports as Percent of GDP • Exports continue to grow as a percentage of GDP.
Percent
32
Exports
• The growth in exports reflects strong sales of
Imports electronic equipment and parts.
30
• Gross fixed investment has decreased in the
28
Philippines; both domestic and foreign investment
26 have dwindled.
24 • While the Philippines has a strong trade surplus with
the United States, trade with Asia has decreased.
22

20

18
80 82 84 86 88 90 92 94 96 98
Source: IFS

Philippines - Bank Lending Philippines - vs. U.S. Real GDP Growth

Bank Investment In 1990 U.S. Prices
US$ Billions Percent Change, Year Ago
6 10
Philippines
U.S.

4 5

2 0

0 -5

-2 -10
80 82 84 86 88 90 92 94 96 98 80 82 84 86 88 90 92 94 96 98
Source: IFS Source: WEFA

Philippines - Trade with US Philippines - Gross Fixed Capital Investment

Export and Import Levels As Percent of GDP
US$ Billions Percent
1.0 Exports 25
Imports
0.8 Trade Balance 24
0.6
23
0.4
22
0.2
21
-0.0

-0.2 20

-0.4 19
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
Source: WEFA Source: Datastream

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