Philippine Constructors Association, Inc.

3/F Padilla Bldg., Francisco Ortigas Jr. Avenue,
Ortigas Center, Pasig City
Philippines 1605
Telefax: (632) 631-2788

Fourth Quarter | 2014

Philippine Economy: Better fourth
quarter but slower 2014 growth

t has been a rollercoaster ride for the Philippine economy in 2014. Gross domestic
product (GDP) recorded lower growth rates in first and third quarters while bouncing
back both in second and fourth quarters of 2014. At the end of 2014, GDP growth rate
was at 6.1% lower than the 7.2% GDP growth rate recorded in 2013.

The 2014 Philippine GDP appeared to be anti-climactic as the global economy showed
signs of solid recovery this year. As a result of faster growth in private consumption,
government spending, investment and exports, US economy will likely grow by 2.4% in
2014 given the advance estimate of 2.6% fourth quarter (Q4) GDP growth rate (Bureau
of Economic Analysis, US Department of Commerce). The 2.4% GDP growth rate of US
in 2014 is higher than the 2.2% growth rate in 2013. Other economic giants such as
China and India have also posted modest GDP growth rates. Driven by strong factory
production, retail sales and investments, China has sustained its GDP growth rate of
7.3% in Q4 2014 resulting to a full-year growth of 7.4%, which is slightly lower than the
7.7% growth posted in 2013.

Even the political tensions in Middle East and Ukraine-Russia did not seem to pose a
major threat in the global economy and world’s oil prices towards the end of 2014.

As such, the slower Philippine GDP growth rate in 2014 was a result of weak domestic
factors, especially government spending and agriculture production. Positive but slower
growth rates in private spending, Service and Industry sectors have all also pulled down
GDP in 2014.

The good news is that the economy can start 2015 on a brighter side given the strong
momentum in Q4 2014. The growth in economy will be driven mainly by strong
performance of exports (as the result of improving global economy), expected higher
government spending and sustained growth in manufacturing and construction sectors.

The economy bounced back in Q4 2014 with a GDP growth rate of 6.9% due to positive
growth rates on agriculture and construction spending, double-digit export growth rate
and faster growth rate in Service Sector. This brings the full-year GDP for 2014 at 6.1%,

Forestry and Fishing (AHFF) has recovered in Q4 2014 with a growth rate of 4.2%. This is also the biggest expansion for Construction Sector since the recorded 31.3%.9% for AHFF.9% in Q1. The other three sectors more than offset the lackluster performance of M&Q.1%. From 5.about 1% lower than 2013 GDP growth rate of 7. The 2014 figure was also the lowest since 2012.) It was not a memorable year for private consumption (Table 1: Household Final Consumption Expenditure) as it experienced a four consecutive decline in 2014.8%.9% in Q4 2013. which is a complete reversal of its negative growth rate (-5. was the Construction Sector with a staggering growth rate of 20.1% 10-year average: 5. however.3% and Electricity. Poultry. The star of Industry Group. Hunting. The Manufacturing was stable at 7.2% growth rate in Q4 2014 despite a decline in Mining and Quarrying (M&Q). The Q4 2014 figure was also the best for AHFF in 2014 and the highest since Q4 2012.7% in Q3. Figure 1: Philippine Quarterly GDP Growth Rates. Agriculture. (More discussions on Construction Sector in the next section. Alcohol. This resulted to a full-year 2014 growth of 1.2%) in the same quarter a year ago. Higher growth rates in Palay. overall domestic private spending was pulled down by slower growth rates for Miscellaneous 2 . an improvement from last year’s 1. Year-on-Year 2014 GDP = 6.1% in Q4 2014. which was significantly higher than the growth of 0.1% in Q1 2013. Despite higher growth rates for Health.4% Source: National Statistical Coordination Board (NSCB)/ Philippine Statistics Authority (PSA) After a decline of 2. Gas and Water Supply (EGWS) recorded a growth rate of 6. private consumption went down to 5. The Industry Group performed better with a 9. Beverages and Tobacco and Recreation and Culture. Corn. Banana and Agricultural Activities and Services has brought back AHFF in the positive territory in Q4 2014.5% in Q4 2014.

9% 0.3% 6.7% 1.5% 4.3% 5.8% in 2014.8% Consumption Expenditure Capital Formation 49.6% 7.1% 7.6% 9.2% 11.9%.7% 12.3% due to faster growth rate in Net Primary Income (NPI) from the Rest of the World at 2.4% -5.3% 6.5% Mining & 2.9% 1.8% 7.5% 10.1% Imports 2. were the leading services being exported.9% 5. This resulted to a full-year 2014 growth rate of 12.0% -0.2% 1.8% -4.9% 7.9% Hunting.9% 12.9% 1. Gas 0. Exports.7% 5. top- performing products including semiconductors.9% 1.1% growth in 2013.7% 6.0% Gross Domestic 7. YOY growth rates (2000 Prices) Sector 2013 2014 Q1 Q2 Q3 Q4 Full. Government Services.5% Quarrying Manufacturing 9.7% 7.2% 7.0% -2.0% 3.9% 5.3% 7.2% 5.5% 9.6%. This led to a full-year 2014 growth rate of 5.2% 7.0% 8.5% indicating a relatively healthy global economy in 2014. on the other hand.4% -2.6% -7.1% 7.2% and Water Supply Service 6.8% 6.6% 22.1% 16. Nonetheless.7% 7.1% 5.8% 1.0% 12.4% 9.1%.1% 13.4% 10. From a minor rebound in Q1 2014 at 1.5% 10.8%.1% Exports -10. Fishing and Forestry Industry 11. Both Exports of Goods and Exports of Services have accelerated in Q4 2014 compared to the previous year.3% 7.3% 5.1% 5.3% Income Source: National Statistical Coordination Board (NSCB)/ Philippine Statistics Authority (PSA) 3 .1% Product Gross National 7.9% 6.6% 0.8% 1. on the other hand.3% 3. For Goods.3% 6. it was a miserable year for government spending.0% 10.8% 6.4% 5.3% 5. control instrumentation and coconut oil.0% 2. slightly lower than the 5.5% 7.9% 9.8% 15.4%.9% 20. government spending has slowed significantly from 7.6% 6.8% 3. 3.4% 3.3% 0.7% 7.3% 6.6% 9.1% 0.3% 8. Table 1: GDP and its components.1% 6.5% 3.6% -4.8% INDUSTRY ORIGIN Agriculture.1% 5. It was consistent in posting double- digit growth rates this year with the highest in Q4 at 15.7% in 2013 to 1. Likewise.2% -1. which is a complete reversal of -1.3% 6.6% 3.6% 17.9% 7.2% 5.5% 1. Gross National Income (GNI) had also rebounded at 6.2% 5.4% Consumption Expenditure Government Final 10.2% -0. Travel and Transportation. Miscellaneous. The Q4 2014 figure was mainly due to higher cash disbursement for salaries and wages and maintenance and other operating expenses (MOOE).1% 3.4% 6.8% 5. the recovery of Public Construction in Q4 2014 was remarkable.2% 7.0% 4.0% 2.2% 3.2% 6.2% 7.8% 33.9% 10.5% 7.4% 3.4% 7.0% 7. On a full year basis.6% 9.5% 12.5% -1.2% Electricity.4% 29.0% -2.2% 9.8% -3.3% 6.0% 6.7% 4.3% 10.9% 3.2% 0.4% 5.7% posted last year.5% 7.Goods and Services and Communication Expenses.1% 0. Insurance.6% 21.7% 5. government spending had a stagnant growth rate of 0% in Q2 2014 before further breaching the negative territory in Q3 at -2.2% 9. Q1 Q2 Q3 Q4 Full- year year EXPENDITURE TYPE Household Final 5. did very well in 2014.5% 5.9% 7.1% Construction 31.0% 6.3% 8.

Peso continues to weaken against the US dollar mainly because of “solid recovery in US economy as a result of quantitative easing by US Fed in October 2014” (Development 4 .25% to 3. Interest rate. Lower prices for food and energy products and lower electricity rates have offset the initial uptick in the inflation rate.1% inflation in 2014. has been relatively low and stable amid two instances of policy rate increase by the Central Bank of the Philippines (Bangko Sentral ng Pilipinas or BSP). BSP increased both its overnight borrowing rate or Revere Repurchase (RRR) and its overnight lending rate or Repurchase (RO) by 0. Figure 2: Key Macroeconomic Rates. After peaking at 4.7% in December 2014 leading to 4.I nflation rate showed an upward trend during the first half but it eventually tapered towards the end 2014. inflation rate fell at 2. Another 0.0% in 2013. The peso. inflation rate has slowed down once again towards the end of the year. BSP has maintained its policy rates at 4. Monthly Growth Rates. Both decisions were done mainly to minimize inflationary pressures that took place during first half 2014. In July. slightly higher than the 3.0% for overnight lending rate after two separate Monetary Board meetings held last October and December 2014. Initially. as measured by 91-day Treasury-bill (T-bill) rate. on the other hand.25% increase was initiated by BSP to push its RRR to 4. we observed a minimal increase in 91-day T-bill rate reflecting the two policy rates initiated by BSP.75% and 5. has been depreciating mainly because of strong US dollar. Nevertheless.9% in July.0%.0% for overnight borrowing rate and 6. which is further due to healthy recover in the US economy. As inflation rate no longer poses a major threat at the moment.0% and RO to 6. the 2014 inflation rate is still within the BSP’s target of 3% to 5%. Year-on-Year Source: Bangko Sentral ng Pilipinas After a brief uptick during Q2 and Q3 2014 due to temporary increase in food prices and logistical problems brought about by truck ban in/from Manila ports.75% respectively.

This shows that Construction Sector has again outperformed GDP growth in 2014.6% in 2013 to 5.3% 6.8% in 2014.001 9.280 2.336 12.4% Notes: Q42013 – Php43. 2014 – Php44. In the last quarter of 2014.5% despite of its slow pace during the first two quarters of the year.6% (in USD million) Share to GDP (%) 5. the Construction Sector started 2014 with practically no growth at all (0.7% against the US dollar from Php/$42. For full year 2014.2% 5. In 2013.5% in Q4 2013 to 6.5% 6.4/$ Growth rates are based on Peso values Source: National Statistical Coordination Board (NSCB)/ Philippine Statistics Authority (PSA) 2014 has been a remarkable year for Construction Sector despite the underspending of the government that was consistently observed throughout the year.8% At Current Prices Q4 2013 Q4 2014 Growth 2013 2014 Growth Rate Rate Construction 4. Construction Industry: Finding ways to keep the growth momentum T he performance of Construction Sector in 2014 is the exact opposite of what happened in 2013.6% 5. Table 2: Share of Construction to GDP At Constant Prices (2000) Q4 2013 Q4 2014 Growth 2013 2014 Growth Rate Rate Construction 2.5% 9. Q42014 – Php44.165 5.3% 6.Budget Coordination Committee Mid-Year Report 2014). robust BPO earnings and credit upgrades have somewhat restrained upward pressures of US dollar to peso. peso had already depreciated by 2. The Sector still ended 2013 with a positive growth rate of 9. sustained inflow of remittances.1% in Q1 before showing a downward trend in the succeeding quarters and even breached the negative mark (-5.6/$.0% 17. Fortunately.2% in Q4 2014 and on a full-year basis: 5.8/$. Overall.4 in 2014. the construction sector posted a positive growth at 8.068 25. the peso has decreased its value by 4. There was also an increased proportion of construction expenditure in the GDP from 5.045 18. 5 . On the other hand.4/$. the Sector started the year with a bang by posting a growth rate of 31.2%) in Q4.5% (in USD million) Share to GDP (%) 5.2%) before ending the year strong with a 20.330 8.5% growth rate in Q4 2014. 2013 – Php42.675 20.4 in 2013 to Php/$44.6%.8% against the US dollar compared to the same period a year ago.6% 6.

300 8.505 6.639 -1.655 14.8/$.4/$ Growth rates are based on Peso values Source: National Statistical Coordination Board (NSCB)/ Philippine Statistics Authority (PSA) Table 4: Gross Value of Construction. the highest growth in 2014.806 2.6% 645 660 5.394 29.4/$ Growth rates are based on Peso values Source: National Statistical Coordination Board (NSCB)/ Philippine Statistics Authority (PSA) The 20.4/$. 2014 – Php44.957 11.0% 2.559 25. Since its dismal performance in Q1 2014 (-6.5% Private 23.5% Notes: Q42013 – Php43. by Construction Sector was mainly attributed to the robust performance of Private Construction and the turnaround of Public Construction to 5.507 7.9% Gross Value in Construction 29.901 25.7% Gross Value in Construction 7.613 16.336 12.3% 3.0% growth) that dragged down the whole sector.064 25.4/$.172 7.0% Gross Value Added in Construction 17. Q42014 – Php44.5% Notes: 2013 – Php42.7% from Q2 to Q4 in 2014).889 12.9% Gross Value Added in Construction 4.9% 3.1% growth during the period.910 3.280 2. 2013 – Php42. and 25.1% Private 5.7%.8%.068 25. 2014 At Current Prices (USD million) At Constant Prices (USD million) INDUSTRY GROUP 2013 2014 Growth Rate 2013 2014 Growth Rate Public 6. The value of 6 .6/$. Table 3: Gross Value of Construction Industry Q3 vs.6% 2.555 4.569 31.816 12.0% 2. 2013 vs. Q4 2014 At Current Prices (USD million) At Constant Prices (USD million) INDUSTRY GROUP Q4 2013 Q4 2014 Growth Rate Q4 2013 Q4 2014 Growth Rate Public 1.219 21.6% 2.3% 10.345 9.045 18.675 20.5% growth rate in Q4. Q4 2014 figures will even surpass this growth once the relevant statistics will be published officially in the coming weeks. 2014 – Php44. Obviously.330 8. 15.276 1. the total value of construction projects during Q3 2014 has reached a considerable growth of 97% from last year. Based on the latest available report by the Philippine Statistics Authority (PSA). Private Construction has been steadily growing at double-digit levels (12.165 5.455 10.440 1.

and Repairs 5. FMRs and other projects has been halted due to the unfavorable Supreme Court decision.2% in Q3 2014 mainly due to underspending of the Aquino Administration.04 28.18 4. the same report revealed that among the country’s regions.7/$. that Public Construction went down by 6.3%). which accounted for bulk of approved building permits (i.residential buildings. irrigation projects.010 844 19. Around USD1.5% 2. there will be a sustained increase in residential construction projects in a bid to revive the country’s housing market and meet demand from the growing population.4%) placed third and fourth. however. Central Visayas and Central Luzon with construction value of USD0.213 1. the value of non-residential construction projects (agricultural. To support this goal. Delays and/or suspension of government infrastructure projects due to several factors such as Supreme Court’s decision declaring that major provisions of Disbursement Acceleration Program (DAP) are illegal and the slow progress in the construction/rehabilitation efforts for Yolanda- struck areas have pulled down the performance of Public Construction in Q2 and Q3 2014: • Implementation of infrastructure projects funded by DAP such as rehabilitation of LRT 1 and 2.60 21. It is expected that in the next coming quarters or years.9%).6% 3. Alterations.7% contraction in the number of projects recorded in the same period.1billion (3.2 billion (5. and also announced the construction of over 300 condominium projects in Metro Manila. commercial.7% 1.2% 182 110 65.0% Notes: Q3 2013 – Php43.e.9% in Q3 2014 despite the 5.83 3.9% in the same quarter.625 million has been initially proposed for DAP projects and these may now be delayed until legal issues surrounding DAP have been resolved. residential sales will become stronger among the high-end market and foreigners. and industrial buildings) grew massively at 197. It is important to note.634 97.9% Total 29.62 29. 7 .3% of the total.8/$ Growth rates are based on Peso values Source: National Statistical Coordination Board (NSCB)/ Philippine Statistics Authority (PSA) Moreover. Q3 2014 – Php43.17 Billion representing 68. the Housing and Land Use Regulatory Board (HLURB) has set a target to construct 1 million housing units by 2016. Meanwhile. Likewise.3 Billion (10. 70%).15 1. CALABARZON ranked a far second with construction value of USD0. respectively.09 billion (2.84 -5. as they are more prone to leasing and renting property.9% Non-Residential 3. most of which will be allocated to the mid-market segment. rose by 19.1%) and USD0. Western Visayas ranked fifth with construction value of USD0. Table 5: Total Value of Construction Projects Number (‘000) Value (in USD million) Type of Private Q3 2014 Q3 2013 Growth Q3 2014 Q3 2013 Growth Construction Projects Rate Rate Residential 20. institutional. NCR – which is ranking third in the number of construction projects – has consistently remained highest in terms of the value of construction at USD2.26 17.020 680 197.9% Additions.

which the agencies attributed to: 1) delayed pre-construction activities due to program modification and realignments.3 million) and other irrigation projects (USD189.0% mobilization cost and/or preference of contractors to claim only upon completion of the project rather than issue progress billings. Actual expenditures of the government during the first half 2014 as reported by the DBCC last September 2014. • Other big ticket infrastructure projects that are delayed include: Tulay ng Pangulo Para Sa Kaunlarang Pang-Agraryo (USD47.3% Personal Services 7. Public Construction had the not reached the positive mark for full year 2014 due to these delays. low obligation rates of government agencies. Overall.982-classroom target in 2014 has been completed.1% 8 . • Slow progress has also been observed on implementation of Yolanda-related projects. 25% of seaports and 70% of airports in Yolanda-afflicted areas based on data from Office for the Presidential Assistant for Rehabilitation and Recovery (OPARR) as of Q3 2014. and lower spending on infrastructure and capital outlays were the major reasons for lower-than- programmed government spending. only 5% of 1. Other reasons for the decline in Public Construction include the following: • Lower-than-expected claims from retirement gratuity and terminal leave benefits. given the better revenue collection by the government in the recent months (in fact. In terms of classroom rehabilitation. DepEd’s Basic Education Facilities (USD675. Delays have been also attributed to coming up with a more calamity resilient structural designs for these classrooms.580 (737) -10. DPWH has underspent by about USD675.090 (2. this means that there a large fiscal space to increase infrastructure spending for the next coming quarters. 3) right-of-way problems.8 million during the first half 2014.8 million). Actual Particulars January-June Deviation (USD million) Program Actual Amount Change CURRENT OPERATING EXPENDITURES 20.766) -13.597-classroom target in 2014 has been completed. 2) non-collection by some contractors of their 15.3 million).317 6. Farm-to-Market Roads (FMRs) (USD270. only 22% of national road projects have been completed.7 million in November 2014).856 18. and 4) failure biddings (DBCC Mid-Year Report 2014). 8. • In terms of roads. Nonetheless. Table 6: National Government Disbursements by Expense Class. only 13% out of 6. • In particular. The table below highlights the comparison of Program vs.2 million). it even posted a surplus of USD153. Program vs.6% for national bridges. funds are not yet released due to late submission of FMR Network Plan with geo- tagged information on the roads and irrigation as required by GAA 2014. For FMRs and irrigation projects. As of Q3 2014.

4 213.8% 221.1% 230.425 (867) -20.4 2. it slowed down to 0.0 208.843 3.9% in Q4 2014) have also decelerated.2% Subsidy 1. Jambs.8% Structural Steel 281.9% in 2014. (47) 100.389 3.1 2.3% 204.1 219.5 3.6% Hardware 215.4 253.3% in Q3 to -8.9% Reinforcing Steel 252.4 2.4% 281.5 183.9% Sand and Gravel 203.9% in Q4 2014) and tile works (from 4.2 3.2% Doors.2 246.9% 179. From 2. 0.8 187.9 210.8% 202.1% G.7 204.3 211. and Steel 202.0 3. The price of fuels and lubricants had deflated further from -0.589 (254) 6.6 3. Table 7: Construction Wholesale Price Indices in Metro Manila Commodity Group Fourth Quarter Full-year 2013 2014 change 2013 2014 change All items 223.2% Notes: January-June 2014: Php44.8 1.2% in Q3 to 2.I.2 0.4% 182. Sheet 184.3 6.4% Cement 192.5 2.5 205.926 1.7 185. the wholesale prices of construction materials had only escalated by 1.294) 16. The increase in prices of cement (from 3.1% in Q3 2014.0 4.9% 190.1 284.427) -26. Maintenance and Other Operating Exp.3% Concrete Products 205.5/$ Growth rates are based on Peso Value Source: Department of Budget and Management Construction Industry Key Indicators Overall. which is practically the same inflation rate posted in 2013.8 4.070 (1.1 0.7 5.2% GRAND TOTAL 26.5 2.9 285.4 1.8 1. 4.4% 200.389 3.1% 179.070 .070 3.319) -30.Land Acquisition and Credit 47 .3 187.112 (811) -42.9% CARP .1 4.196 (4.7 254.0 4.2% Tile works 182.2% Allotment to LGUs 3.5% Infrastructure/Other Capital Outlays 4. the increase in wholesale prices of construction materials had slowed down in Q4 2014.2 1.6% Tax Expenditure 407 312 (94) -23.3 189.7% Lumber 232.7% 9 .0% Glass and Glass Products 179.294 3.2 197.8 220.2% 214.6 2.5 185.9 198.8% in Q4 2014.0% NET LENDING 247 146 (101) 41.492 22.4% in Q3 to 2.0 241.1% 180.2% Capital Transfers to LGUs 906 881 (27) -2.5 2.3 1. On a full-year basis.6 225.0% Equity 47 9 (36) -79.3 0.0% Interest Payments 3.3% CAPITAL OUTLAYS 5.3% Plywood 181.6% 251.962 (1.9 2.3 188.3 190.5 225.9% in Q4 2014 as a result of global downward pressure in fuel prices.

8 204.839 100.07 0% 10 .0% Source: National Statistics Office / Philippine Statistics Authority The construction industry remains the second major employer under the Industry Group with a total of 2. Table 8: Employment in Construction Industry Sector 2012 Share to Total 2013 Share to Total 2014 Share to Total Employment (Oct) Employment (Oct) Employment Agriculture 12.0% 3.9 -1.0% Fuels and Lubricants 336.97 4% Water Supply.0% Machinery and Equipment Rental 114.6 181.0% 464.4% 155 0.1% Accessories/Waterworks Painting Works 204.51 7.4 1.36 14.6% Services 19.5% 203.3% Construction 2.5 3.6 114.3 207.0 180.2% 12. Gas.1 3.0 464.0% Asphalt 464.10 7.0% in October 2013 to 6.093 32.0 464.1% Electricity.03 in 2014.0% 114.55 million employees as of October 2014.82 -3% Electricity.11 6.3% 20.5 7.5% 11.3% 5.7 173.779 15.559 53.7% 222 0. Gas & Water 148 0.0 1.3 3.06 10.133 8.9% 197.148 31.9% 175.304 6. This also increased the share of construction industry to total employment in the economy from 6.3 1. an increase of about 250.6% Manufacturing 3. Steam and Air-conditioning Supply 15.764 52.556 6.947 30.9% from 2013.6 114.Casement Electrical Works 199.0% Source: Bureau of Labor and Employment Statistics.232 5. Waste Management 10.7 207.6% Mining & Quarrying 250 0. Table 9: Average Daily Basic Pay among Industry Group Industry Group 2012 2013 2014 Growth Rate Mining and Quarrying 7.9% 333.0 0.0% 2.7 6.112 8.743 15.6 0. Department of Labor and Employment The construction industry showed improvement on its average daily basic pay with Php323.6% 225 0.8% Total 37.6 306. a slight increase of 1.0% 6.8 206.600 100.3% 3.6 0.6% 20.0 169.2% PVC Pipes 177.27 10.2% Plumbing Fixtures & 161.079 8.8% Industry 5.82 8.537 100.9% 2.884 53.000 jobs compared to same period a year ago.6% in October 2014.0% 38. Sewerage.41 -10% Manufacturing 7.3 329.7 -8.96 14.3% 160.0% 38.048 15.0 0.4% 134 0.

we can expect more infrastructure projects to be implemented in 2015. • DepEd to complete construction of additional 331 classrooms and rehabilitation of 10. Construction 7. This expectation heavily depends on government spending particularly for major infrastructure projects especially that the government is targeting to hit the international benchmark of 5% of GDP for infrastructure investments by 2016.33 billion in 2015. the domestic economy recorded another rebound with a 6.738 classrooms in Yolanda-affected areas by 2015 1 DPWH Presentation during the Economic Briefing held last November 2014 at University of Asia & the Pacific 11 . Budget of DPWH has increased from USD4.5%) of the government.0% World Bank (WB) 6.0% Asian Development Bank (ADB) 6. budget of DOTC has jumped from USD1.5% 6. Likewise.1%. Table 10: Summary of Philippine GDP Projections Agencies 2015 2016 2017 Philippine Government 7. • By 2015. Department of Labor and Employment Outlook: Brighter times ahead As expected.7 billion1.3% Source: Respective agency’s website For 2015.5-8.e. which is rather expected given lower private and government spending and agricultural output. we expect more infrastructure projects to be rolled out particularly towards the end of 2015. 6.5% 6.26 -3% Source: Bureau of Labor and Employment Statistics.0% 7. Since 2016 is another elections year and Philippine will host the ASEAN 2015 meetings.10 billion in 2014 to USD1.36 7. With these two government agencies having bigger budget in 2015.0-8. we believe that 7% GDP growth rate is more realistic for the Philippines.0-8.94 billion in 2014 to USD6.0% 6.5% 7. We expect an uptick in government spending in 2015 due to the following: • DBM has announced that 78% (USD45.51 7.75 billion in 2015. We also expect acceleration from the government side in relation to construction/rehabilitation efforts in Yolanda-affected areas amid pressures from various groups.4% International Monetary Fund (IMF) 6.9% growth rate in Q4 pushing the 2014 GDP growth rate at 6.3% 6. This is below the lower-end GDP target (i.89 billion) of the total budget under GAA for 2015 has been released already to jumpstart procurement and implementation. the government expects infrastructure investment to reach 4% of the GDP and by 2016 it will reach the standard infrastructure spending to GDP ratio of 5% at USD18.

will put upward pressure to domestic prices.36 For issuance of pre-qualification Project documents Davao Sasa Port Modernization Project 922. will sustain its rise in 2015 given steady demand for skilled and professional Filipino manpower supported the growth in remittance inflows.95 2017 Connector Road Plaridel By-Pass Road. 91-day T-bill) shall depend largely on the movement of inflation rate. to global oil prices. The direction of short-term interest rate (i.14 Bidding phase Bulacan Bulk Water Supply Project 554.0% for 2015. Other big ticket PPP projects that will be rolled out in the coming quarters/years are presented in the table below: Table 12: Pipeline of Major PPP Infrastructure Projects Project Name Value Status (USD Million) Laguna Lakeshore Expressway Dike 2.96 77. which reached US$24.45 For issuance of invitation to bid CALA Expressway 805.15 280.586.e.55 Bidding phase Integrated Transport System – South Terminal Project 90. Pre-qualification stage Airport Development.791.73 2015 NAIA Expressway 7.140.0% to 4.68 2014 STAR.05 2018 Daang Hari-SLEx Link 4. Personal remittances from Overseas Filipino Workers (OFWs).44 Billion LRT 1 Cavite Extension and Operation & Maintenance. 2) $39 Million Automated Fare Collection System. • Construction of ongoing major DPWH Projects as presented in the table below: Table 11: On-going DPWH Projects Project Name Length (km) Value Completion (USD Million) Tarlac-Pangasinan-La Union Expressway 88.598. Operations and Maintenance 2.91 2017 Manila North Expressway including NLEx-SLEx 26.95 2017 Source: Department of Public Works and Highways • Construction of recently awarded Public-Private Partnership (PPP) Projects such as the: 1) USD129 Million Modernization of the Philippine Orthopedic Center.05 For issuance of invitation to bid Regional Prison Facilities 1. Phase II 19. From January to November 12 . especially if they escalate. Phase II 9.82 605. 3) USD389 Million Mactan-Cebu International Airport Passenger Terminal Building.91 Bidding Phase Operation and Maintenance of LRT Line 2 .23 For rebidding Makati-Pasay-Taguig Mass Transit System Loop 8. which in turn.85 412.74 52. The geopolitical tensions in Middle East and Ukraine-Russia may put upward pressure.00 2015 Metro Manila Skyway Stage 3 14.2% higher than the same period a year ago. 4) USD1.27 657.41 Government approved Source: PPP Center Inflation rate shall remain stable and within BSP’s target of 2.4 billion in January-November 2014 and is 6. and 5) USD56 Million Integrated Transport System – Southwest Terminal Project. Lipa – Batangas .00 45.

895 billion in January-October 2014. Expansion of services and geographical scope will also help the industry to sustain growth in 2015. Tourism visitor receipts have reached USD3.2014. Australia. The estimated revenue of USD18 billion in 2014 can be sustained in 2015 given strong demand for BPO services in the Philippines.” Tourism sector is expected to attract 8. For October 2014 alone.02% higher than the same month the previous year. which started in December 2014 and will continue until November 2015. Top five visitors are Koreans.3 million employment in BPO industry in 2016 is another indicator that there will be positive growth rates in this industry.3 million workers. tourism receipts have reached USD333. The APEC meetings. 7. 8. The Philippine BPO industry will remain robust in 2015 as the country remains a popular hub in the Asia-Pacific. United States.14% higher than the same period a year ago. Number of tourists visiting the Philippines is expected to increase in 2015 especially with DOT declaring 2015 as “Visit the Philippines Year” and The Lonely Planet recently tagged the country as a “must-see destination in 2015.10 million.2 million travellers in 2015 while increasing its share to GDP to USD21.85 billion and employing 6. will pave way for more construction of hotels and office buildings in the country. Japan and China (Department of Tourism). job orders have reached 855. The projection of 1. Higher remittances will continue to drive private spending in domestic economy and help the peso minimize the effects of a stronger dollar. 13 .357.