Philippines
Date: 5 May 2011
The event will be held in Manila, Philippines, with the participation of distinguished participants from academia, government, civil society, international organizations, and the press. The list of well known participants making opening remarks, presentations and commenting on the publication includes:
Myrna Austria
Vice-Chancellor for Academics and Research
Full Professor
Economics Department
De La Salle University
Daniel Jeongdae Lee
Associate Economic Affairs Officer
Macroeconomic Policy and Development Division
United Nations Economic and Social Commission for Asia and the Pacific
Renaud Meyer
Country Director
United Nations Development Programme
Philippines
Country briefing note <download pdf file>
Robust economic growth is led by private consumption and exports
• After a modest 1.1% growth in 2009, the Philippines benefited from a revival of exports and manufacturing, especially in electronic goods, which account for over 60% of its export earnings.
• The economy exceeded expectations with a 7.3% growth in 2010, despite adverse weather conditions hitting the agricultural sector and rice production hard.
• Private consumption, which accounts for over 70% of GDP, received a boost from strong remittance inflows and pre-election spending as well as an accommodative monetary policy.
• The business process outsourcing industry continued to grow rapidly.
• Early progress in the new administration's efforts to improve the fiscal balance has also led to improved investor perceptions. Gross domestic investment remains among the lowest in the subregion, however, and greater efforts are needed to improve the business environment and basic infrastructure.
• In 2011, the economy will see growth moderate to 5.2%. Recent developments in the Middle East and Japan may have an impact on remittances.
Inflation is relatively stable but rising
• Inflation was relatively stable at 3.8% in 2010, partially because the Government was able to alleviate upward pressure on food prices by supplementing national stocks with a record 2.45 million tons of rice imports in 2010.
• Inflation is expected to rise but remain within the central bank's 3-5% target this year, although in some months it could breach the 5% mark.
Progress in tax administration is accompanied by better targeted social programmes
• Government efforts to rein in tax evasion saw early progress in 2010. Government revenue is still low as a proportion of GDP, however, and it may be necessary to introduce measures to boost revenues and further reduce public debt, which is still above 50% of GDP.
• The Government also introduced plans to rationalize spending by cutting down on inefficient programmes and instead putting in place a larger conditional cash transfer programme.
Monetary stance becomes less accommodative
• Unlike most of its regional peers, the Philippines kept policy interest rates unchanged through 2010 at record low levels. However, other measures to increase credit flow, such as lower bank reserve requirements, were rolled back at the beginning of 2010.
• As inflationary pressure increased, the central bank raised its benchmark interest rate by 25 basis points in March 2011 for the first time since July 2009. More hikes are expected to follow.
• Boosted by strong foreign capital inflows, South-East Asian stock exchanges were among the best performers in the Asia-Pacific region in 2010. The Philippines ' stock market index surged by 38%.
Current account continues to benefit from large remittance inflows
• The Philippines maintained a current account surplus of around 4.5% of GDP in 2010. Merchandise trade was in deficit but there was a large surplus in services from overseas worker remittances.
• Broader trends affecting South-East Asian exports are weakening demand in the developed countries, partly offset by rising demand from China and India .
• Fuelled by massive capital inflows, the ASEAN-5 economies saw their currencies appreciate substantially against the dollar in 2010. The Philippines peso gained by 5.7%.
Continued effort is needed to address vulnerable employment and poverty
• While unemployment has fallen to pre-crisis levels in many countries in South-East Asia , the formal sector has seen less improvement, as many of the workers who had been laid off were absorbed by the informal sector during the crisis.
• For instance, a 2010 labour survey in the Philippines found that the ratio of workers earning wages and salaries—as opposed to the self-employed and unpaid family workers—had fallen from 55.3% a year earlier to 53.2%.
• The informal sector, however, suffers from lower productivity, lower wages, poorer working conditions, lower employment protection and minimum levels of social protection. This has serious implications not only for poverty but also for the future growth potential.
• Therefore, human resources and skills development—including strengthened education, technical and vocational training and lifelong learning—are vital for sustained dynamism.
• Such efforts will also help to tackle high youth unemployment.
• Moreover, considering that labour is one of the few assets of the poor, creating more and better jobs will help the poor to earn their way out of poverty.
• In this regard, economic policies should be tailored towards expanding opportunities for poor workers to move into better jobs in the formal and nonagricultural sectors.