Economic Performance and Indicators July 2017

ECONOMIC PERFORMANCE AND INDICATORS (As of 5 July 2017)

Gross Domestic Product

• The Philippine economy expanded by 6.4 percent in the first quarter of 2017, down from 6.9 percent the previous year.
• This figure missed the government forecast of 7%. The services and industry sectors – the major contributors to the economy – both slowed in the first quarter. Agriculture, on the other hand, was able to grow 4.9%, turning around a 4.3% decline last year.
• Despite the weak start in our GDP growth this year, the Philippines is still one of the best-performing emerging economies in the region. Our GDP growth is second only to China and surpasses that of Indonesia, Thailand and Vietnam.
• Economic managers are confident the economy can catch up in the coming quarters to hit their target of 6.5-7.5% growth by the yearend.
• Early this month, the World Bank has projected the country to continue its robust growth in 2017, saying the country’s economy will expand at 6.8 percent this year.

Trade / Exports / Imports

• As of April this year, total exports increased by 12.1 percent to $4.805 billion in 2017 from $4.285 billion in 2016. Meanwhile, total imports slightly decreased by 0.1 percent from $6.865 billion in 2016 to $6.857 billion in 2017.
• The country’s balance of trade in goods (BoT-G) registered a $2.052 billion deficit in 2017 lower than the $2.580 billion deficit in April 2016.

Inflation 

• The headline inflation at the national level decelerated to 3.1 percent in May 2017. It was registered at 3.4 percent in the previous month and 1.6 percent in May 2016.
• Slower annual increments were posted in the indices of the following commodity groups: Food and Non-Alcoholic Beverages (3.8%), Alcoholic Beverages and Tobacco (6.1%), Clothing and Footwear (2.2%), Furnishing, Household Equipment and Routine Maintenance of the House (2.3%), Health (2.4%), Transport (2.7%), Communication (0.2%), and Recreation and Culture (1.4%),

Employment

• The employment rate in April 2017 was estimated at 94.3 percent.  In April 2016, the employment rate was 93.9 percent. 

• The unemployment rate as of April 2017 was estimated at 5.7 %. Last April 2016, the unemployment rate was 6.1 %. 

Budget (Revenues and Expenditure)

• The National Government (NG) fiscal balance was at a surplus of P2.2 billion for the first month of 2017, a reversal of the P3.5 billion deficit posted in the previous year. This marks the first time NG achieved positive fiscal balance for the month since 2010. This reflects improved revenue collection effort and prudent spending with year-on-year growth of 10% and 7% for revenues and expenditures, respectively.
• Total revenues for the month reached P200.3 billion, P18.1 billion higher compared to the level posted in January 2016. 92% of revenues were from tax collections.
• The biggest contributor to the revenue expansion is Bureau of Internal Revenue (BIR) which posted collections of P147.4 billion for the month that grew 14% over the last year, attributed to higher tax payer compliance and other reforms undertaken by the Bureau such as expansion of its Large Taxpayers Service.
• The NG disbursed a total of P198.1 billion in January, 7% or P12.4 billion higher than comparable figure last year. This is in spite of the 7% YoY decline in interest payments for the month. Only 21% of the total expenditures went to the payment of interest, against the previous year’s 25% showing that the growth in disbursements mainly came from releases to productive components of the budget. Total interest payments was at P42.4 billion for the month.
• Netting out the interest payments from the expenditures, NG recorded a P44.6 billion primary surplus for January, exceeding the primary surplus for the same period last year by 6% or P2.5 billion.

Foreign Direct Investment / Portfolio Investment

• For the first four months of 2017, the Philippines had a net inflow of $51 million in foreign portfolio investments. The BSP said this was a reversal from the $460 million net outflows recorded in March and $354 million outflows from a year ago. 

• This development may be attributed to investor reaction to the World Bank’s view that the Philippines will continue to be a top performer in the region, coupled with positive sentiment in anticipation of the country’s strong gross domestic product number for the first quarter of 2017.
• The BSP however also noted that the first four months of the year resulted in net outflows of $516 million on a year-to-date basis, vis-à-vis the $56 million net inflows for the same period in 2016.
• It added that registered foreign portfolio investments fell 3.9 percent to $1.3 billion in April compared to $1.4 billion recorded in March.  

Currency / Reserves  

• The Peso depreciated against the US dollar in Q1 2017. On a q-o-q basis, the peso depreciated by 1.79 percent to average ₱50.00/US$1 in Q1 2017 from the previous quarter’s average of ₱49.11/US$1.  

• Likewise, on a y-o-y basis, the peso depreciated by 5.45 percent relative to the ₱47.28/US$1 average in Q1 2016. The weakening of the peso during the review quarter was due mainly to the US Fed rate hike in March 2017, expectation for further rate increases in 2017, and strong US dollar requirement by local corporates. 

Remittances

• Personal remittances from Overseas Filipinos (OFs) amounted to US$10 billion for January to April 2017, registering 4.7 percent year-on-year growth.  

• Personal remittances from land-based workers with work contracts of one year or more aggregated US$7.8 billion while those from sea-based and land-based workers with work contracts of less than one year totaled US$2.1 billion for the same period. However, personal remittances in April (at US$2.3 billion) were 5.2 percent lower than the level posted in the same month last year.

• For the first four months of 2017, cash remittances from OFs coursed through banks recorded 4.2 percent growth from the level posted in the same period a year ago, reaching US$9.0 billion. Specifically, remittances sent by land-based workers increased by 5.8 percent, compensating for the 1.4 percent decline in sea-based workers’ remittances. For April alone, total cash remittances fell by 5.9 percent year-on-year to US$2.1 billion. This was attributed to the 7.6 percent drop in cash remittances from land-based workers which offset the marginal increase (0.3 percent) in transfers from sea-based workers.

• Cash remittances coming from the United States (US), Saudi Arabia, United Arab Emirates (UAE), Singapore, Japan, UK, Qatar, Kuwait, Hong Kong, and Canada comprised about 80 percent of total cash remittances in the first four months of 2017.

• Cash remittances from the UK to the Philippines reached US$ 458,114,000 from January to April 2017, down by -1.8% from US$ 466,742,000 for the same period in 2016. UK remains the top source of overseas Filipino remittances in Europe, representing 36.8 % of the total remittances from the region. (Note: UK is followed by Germany, Italy and Greece.). 

Tourists

• For the first two months of 2017, a total of 1,210,817 visitors arrived in the Philippines. This volume is 10.88% higher than the accumulated 1,091,983 arrivals in the same period last year.

• Total earnings gained from tourism activities from this period amounted to Php 40,081.85 billon.

• Arrivals from the UK have reached 30,973 within the said period. The UK still ranks as the 8^th top visitor market for the Philippines as of February 2017.