Anda di halaman 1dari 42

Asian Development Bank

The Status of the Philippine Economy


by Gnter Hecker
January, 2001

Asian Development Bank

The Status of the Philippine Economy


by Gnter Hecker
December, 2000

What you hear about the Philippines in the news lately


Corruption and cronyism are at a high point Governance low Administration not functioning Budget in disarray, therefore IMF has walked out on the Philippines, therefore.. Investors confidence going towards the zero-point Peso at all time low Stock market at rock-bottom Economy in shambles Project implementation takes twice as long as it should

What you hear about the Philippines in the news lately


Corruption and cronyism are at a high point Governance low Administration not functioning Budget in disarray, therefore IMF has walked out on the Philippines, therefore.. Investors confidence going towards the zero-point Peso at all time low Stock market at rock-bottom Economy in shambles Project implementation takes twice as long as it should

GDP Growth (%)


least affected by the crisis, but moderate recovery
15.00 10.00 5.00 0.00
2000est 98Q1 98Q2 98Q3 98Q4 99Q1 99Q2 99Q3 99Q4 00Q1 00Q2 00Q3 00Q4 1996 1997 1998 1999

-5.00 -10.00 -15.00 -20.00

Philippines

Indonesia

Korea

Malaysia

Thailand

Inflation Rate (%)

.stayed in manageable levels


10 0 5 15

19 96 19 97 19 98 19 9 20 9 00 e

Philippines

Indonesia

98 Q 1 98 Q 2 98 Q 3 98 Q 4 99 Q 1 99 Q 2 99 Q 3 99 Q 4 00 Q 1 00 Q 2 00 Q 3 00 Q 4

Korea

Malaysia

Thailand

Current Account Balance as % of GDP


has been increasing since the crisis to second place
20 15 10 5 0 98Q1 98Q3 99Q1 99Q3 00Q1 -5 -10 Philippines Indonesia Korea Malaysia Thailand 2000e 00Q3 1996 1998

Exports of Goods and Services Growth (%)

.exports are growing, while.


50 40 30 20 10 0 -10 -20 -30 -40 -50

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

Philippines

2000e

Indonesia

Korea

Malaysia

Thailand

00Q4

1996

1997

1998

1999

Imports of Goods and Services Growth (%)


imports are contracting 50 40 30 20 10 0 -10 -20 -30 -40 -50

98Q1

98Q2

98Q3

98Q4

99Q1

99Q2

99Q3

99Q4

00Q1

00Q2

00Q3

Philippines

2000e

Indonesia

Korea

Malaysia

Thailand

00Q4

1996

1997

1998

1999

Exchange Rate Index


(weekly average, last week of June 1997 = 100, $/local currency)

..rates moved together with the other comparator currencies


100 90 80 70 60 50 40 30 20 10 0
Jun-97 Jun-98 Jun-99 Feb -98 Feb -99 Feb -00 Jun-00 O ct-97 O ct-98 O ct-99 O ct-00
J2K Effect

Indonesia

Rep of Korea

Malaysia

Philippines

Thailand

100

105

110

115

80 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Sep-00 Oct-00 Nov-00 Dec-00 Jan-01

85

90

95
EDSA2 Effect

Pesos vis--vis Euro


J2K Effect

Composite Stock Price Index


(weekly average, last week of June 1997=100)
180 160 140 120 100 80 60 40 20
99 97 98 98 98 00 00 99 97 97 99 99 00 00 98 98 99 98 00 97 99 00 n- ug- ct- ec - e b- pr- un- ug- ct- ec - e b- pr- un- ug- ct- ec - e b- pr- un- ug- ct- ec Ju A O J O J O D J O D F A D F A F A D A A A

J2k Effect

EDSA2 Effect

Indonesia

Rep of Korea

Malaysia

Philippines

Thailand

NPL of Commercial Banks


..low but slightly increasing
Philippines Thailand Malaysia Korea Indonesia 0.00% 20.00% 40.00% 60.00% Latest estimate available Dec-99 Peak level since the crisis

Gross Int'l Reserves (GIR) Less Gold vs. Short-term Debts


(US$ million) Philippines
15,000 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 5,000 2000YTD 98Q1 98Q3 99Q1 99Q3 00Q1 00Q3 1996 1998

GIR

Shorterm Debts

GDP per Capita Development


.Philippines is second to reach thee pre-crisis GDP/cap level
120 115 110 105 100 95 90 85 80 Philippines Indonesia Korea Malaysia Thailand 1996 1997 1998 1999 2000

Central Government Fiscal Balance as % of GDP


..in manageable deficit (however not meeting target figures), but
5 0
1 2 4 1 3 00 Q 3 4 3 1 19 99 20 00 19 96 19 97 19 98 2 98 Q 98 Q 99 Q 99 Q 99 Q 00 Q 2

-5 -10 -15 Philippines Indonesia Korea Malaysia Thailand

00 Q

98 Q

98 Q

99 Q

00 Q

External Debt as % of GDP


debt 160 140 120 100 80 60 40 20 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Philippines Indonesia Korea Malaysia Thailand

level is second highest of Region

Government Debt Situation


1200 1000 30.00% 800 600 400 10.00% 200 0 1996 Foreign Debt 1997 1998 1999 2000YTD 0.00% 20.00% 40.00%

Domestic Debt

Debt Svc. In % of Budget Expend.

Tax Revenue in % of GNP


(1991-2000 Average) .amongst lowest in Region

Philippines Thailand Malaysia Korea Indonesia

10

20

30

Tax Revenue in % of GNP


25.0% 20.0% 15.0% 10.0% 5.0% 0.0% 91 92 93 94 95 96 97 98 99 '00 '01 '02 '03 '04 GoP Plan

Revenues Waived due to Tax Incentives


in billion Pesos high portion of special exemptions since 1997
60 50
12.87

40 30 20 10 0
14.96 3.5 4.72 26.96 19.4 4.08 16.4 3.84 19.22 20.63 37.72

15.11

28.65

1993

1994

1995

1996

1997

1998

1999

Import Tax Excemptions

Others

Budget Support to Gov.owned Corporations


in billion Pesos (1999)
Others Nat.Tobacco Adm. PNR 1999 NFA Nat.Elec.Adm. Nat.Home Morg.Fin.Corp. NHA

0.00

1.00

2.00

3.00 4.00

5.00 6.00

7.00

Foreign Direct Investment


in $ million
.FDIs are dwindling $8,000 $6,000 $4,000 $2,000 $0 -$2,000 -$4,000 Philippines Indonesia Korea Malaysia Thailand 1995 1996 1997 1998 1999 2000

Real Gross Domestic Investment Growth


worrying level of investment
40 20 0 2000YTD 98Q1 98Q2 98Q3 98Q4 99Q1 99Q2 99Q3 99Q4 00Q1 00Q2 00Q3 -20 -40 -60 00Q4 1996 1997 1998 1999

Philippines

Indonesia

Korea

Malaysia

Thailand

Major Constraints for Philippine Economy


Lackluster Growth High Population Growth High Unemployment Asset Ownership Distribution Savings Ratio Governance Low Performance of Agriculture Sector

-8 -10

10 8

-4 -6

1965 1967 1969 1971 1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999
PostMarcos Era Marcos Era

2 0 -2

6 4

Long-term GNP Growth

Population Growth
still has the second largest growth
3.00 2.50 2.00 1.50 1.00 0.50 0.00 Indonesia Korea Malaysia 80's 90's Thailand Philippines

Annual Rate of Poverty Reduction


1985-95

East Asia Thailand Malaysia Korea Indonesia Philippines

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

Unemployment Rate (%)


.highest in Region
14 12 10 8 6 4 2 0 98Q1 98Q2 98Q3 98Q4 99Q1 99Q2 99Q3 99Q4 00Q1 00Q2 00Q3 00Q4 1996 1997 1998 1999

Indonesia

Korea

Malaysia

Thailand

Philippines

Savings Ratio in the 1990s


.Philippines is lowest

Savings Ratio

Singapore Philippines Thailand Malaysia Korea Indonesia 10% 20% 30% 40% 50%

0%

Saving Ratio vs.GNP Growth


.growth seems to determine savings ratio
30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 1982 1984 1986 1988 1990 1992 1994 1996 1998 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% -2.00% -4.00% -6.00% -8.00% -10.00%

National Savings Ratio

GNP Growth

Corporate Ownership Distribution in % of Total

15 richest Families

Philippines Thailand Malaysia Korea Indonesia

0%

20%

40%

60%

80%

Governance Indicators
Rule of Law 10
Malaysia Korea Thailand Indonesia Philippines

5 0 Efficiency of Judicial System

Corruption

Performance of Philippine Agricultural Sector


in % of best practice in terms of yields per hectar

Rice 100 50 Banana 0 Corn


Philippines Best practice

Sugar

Copra

GNP vs Agri Sector Growth


10 8 6 4 2 0 -2 -4 -6 -8 -10

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

Real GNP Growth

Growth Rate Agri Sector

1999

Sources of ODA Loans


As of Dec 2000
Others 5%

ADB 22%

JBIC 53% Worldbank 20%

Total: $ 12.9 B

Status of ODA Loans


as of Dec 2000 very unsatisfactory Portfolio performance
$7.00 $6.00 $5.00 $4.00 $3.00 $2.00 $1.00 $0.00 JBIC WB Disbursed ADB Undisbursed 1.6 1.3 1.2 1.7 1.09 0.3 0.3 Others 5.3

Total $ 12.9b

Scenario for the Philippines


Fiscal deficit will be difficult to close Politically difficult to increase taxes Export may suffer to due slowdown of US economy Agriculture.next El Nio in sight Direct foreign investmentcompetition by other countries increasing

10 Areas of special Attention..


1. Improve investors confidence 2. Accelerate sector reforms 3. Achieve fiscal consolidation 4. Broaden liberalization of economy 5. Conserve remarkable export performance 6. Exploit competitive advantages 7. Enhance competitiveness 8. Increase investment in rural areas 9. Increase savings rate 10. Improve implementation of ongoing investment

ADB-HQ, 1st Floor East Zone Tel: 638-1002 Web: www.adb.org

Thank you very much