A.

NARRATIVE REPORT

I. Introduction

Gross Domestic Product (GDP) is the total monetary or market value of all
the finished goods and services produced within a country's borders in a specific
time period. As a broad measure of overall domestic production, it functions as a
comprehensive scorecard of the country’s economic health. It is the broadest
quantitative measure of a nation's total economic activity.

Though GDP is usually calculated on an annual basis, it can be calculated on

a quarterly basis as well. In the Philippines, for example, the government
releases an annualized GDP estimate for each quarter and also for an entire
year. Most of the individual data sets will also be given in real terms, meaning
that the data is adjusted for price changes, and is, therefore, net of inflation. GDP
includes all private and public consumption, government outlays, investments,
additions to private inventories, paid-in construction costs, and the foreign
balance of trade (exports are added, imports are subtracted).

The economy of the Philippines is the world's 36th largest economy by

nominal GDP according to the 2019 estimate of the International Monetary
Fund's statistics, it is the 13th largest economy in Asia, and the 4th largest
economy in the ASEAN after Indonesia, Malaysia and Thailand. The Philippines
is one of the emerging markets and is the sixth richest in Southeast Asia by GDP
per capita values, after the regional countries of Singapore, Brunei, Malaysia,
Thailand and Indonesia.

II. Objectives

Gross domestic product (GDP) is one of the most common indicators used to
track the health of a nation's economy. It includes a number of different factors
such as consumption and investment. It represents the total value of all goods
and services produced over a specific time period, often referred to as the size of
the economy. GDP is usually expressed as a comparison to the previous quarter
or year.

GDP is primarily used to gauge the health of a country's economy. It is the

monetary value of all the finished goods and services produced within a country's
borders in a specific time period and includes anything produced by the country's
citizens and foreigners within its borders.

III. Body

GDP of the Philippines

The Philippine economy gathered momentum in the final quarter even though
full-year growth slid to an eight-year low and missed the target caused by
weakness in agriculture and the impact of budget approval delays.
Gross domestic product grew 6.4 per cent in the last three months of the year
from a year ago, missing the 6.5 per cent forecast. In seasonally-adjusted
quarter-on-quarter terms, the economy grew 2.2% in Q4, up from Q3’s revised
1.9% growth (previously reported: +1.6% quarter-on-quarter).However, it was
faster than the previous quarter's revised growth of 6.0 per cent caused by the
strong domestic demand and government spending which brought full-year
growth to 5.9 per cent, missing the low-end of the government's 6.0 per cent-6.5
per cent expansion target. It marked the lowest growth in eight years. Exports of
goods and services increased 2.0% in annual terms in Q4. The improvement
came on the back of a rebound in exports of goods, whereas growth in exports of
services weakened. Import growth, on the other hand, recovered slightly. Noting
weakness in exports, the fourth quarter rebound in growth is unlikely to last,
adding the 6.4 per cent expansion will be as good as it gets.
The economy, which grew 6.2 per cent in 2018, remains one of Asia's fastest
growing economies.The pick up in fourth quarter growth reflected strong
domestic consumption, underpinned by benign inflation, as well as a faster
turnaround in government outlays, which offset weak farm output and trade. The
full percentage point loss in the GDP rate was because of the delay in the
passage of budget.
With inflation having averaged 2.5 per cent last year, the central bank has
said it could afford to resume easing monetary policy this year after last year's
three interest rate cuts totalling 75 basis points.
The government's efforts to catch up with its expenditure plans, which were
delayed by the approval of last year's budget, have paid off with public spending
up 22 per cent in November from a year ago. The government is targeting
economic growth of 6.5 per cent-7.5 per cent this year. The central bank is
optimistic that 7 per cent growth is attainable this year.
Current Issue

The Philippines' gross domestic product (GDP) grew by 6.4% in the 4th

quarter of 2019, but it was not enough to propel the year's average within the
government's target band.
The government aimed for economic growth to hit somewhere between 6%
and 6.5%, but the 2019 average settled at 5.9%, said the Philippine Statistics
Authority (PSA) on Thursday, January 23. This is the slowest growth in 8 years.
Gross domestic product grew 6.4 per cent in the last three months of the year
from a year ago, the statistics agency said on Thursday (Jan 23), missing the 6.5
per cent forecast in a Reuters poll. However, it was faster than the previous
quarter's revised growth of 6.0 per cent, thanks to strong domestic demand and
government spending.

Why did Philippine growth drop to an 8-year low?

Analysts notes that there are two possible reasons behind this growth. First is
because of the decline in private investments. Private investments dropped
mostly on account of the poor production of “durable equipment,” which comprise
road vehicles, telecommunications equipment, mining and construction
machinery, and office machinery. Another reason is because of weaker industry.
In the past decade services have always been strong, and agriculture has always
been weak.

What’s surprising is the sudden weakness of industry, whose contribution to

growth fell to its lowest level since 2011. This comes after years of robust,
sizable industrial growth. Some economists think industry is still one of the best
and fastest ways to grow our economy: for the same amount of inputs, industry
still produces more valuable output than services or agriculture. Other
economists, however, contend that services might prove to be a suitable
alternative ladder to growth nowadays, albeit less productive. After all, a full
resurgence of the country’s industrial sector in the 21 st century is
arguably unlikely.

Noting weakness in exports, analysts at Capital Economics say the fourth

quarter rebound in growth is unlikely to last, adding the 6.4 per cent expansion
"will be as good as it gets.". The economy, which grew 6.2 per cent in 2018,
remains one of Asia's fastest growing economies.The pick-up in fourth quarter
growth reflected strong domestic consumption, underpinned by benign inflation,
as well as a faster turnaround in government outlays, which offset weak farm
output and trade.

"A full percentage point was lost because of the delay in the passage of
budget. We could have grown close to if not right smack 7 per cent," Mr Pernia
said. The government's efforts to catch up with its expenditure plans, which were
delayed by the approval of last year's budget, have paid off with public spending
up 22 per cent in November from a year ago. "This key engine of growth is
expected to provide further support for the economy in 2020, assuming no further
delay in budget approval," said Mr Jiaxin Lu, economist at Continuum
Economics.

President Rodrigo Duterte this month signed a record 4.1 trillion pesos
(S$108.5 billion) budget for this year, up 12 per cent from last year, ensuring
timely funding for an infrastructure overhaul in the country of more than 105
million people. The government is targeting economic growth of 6.5 per cent-7.5
per cent this year. The central bank is optimistic that 7 per cent growth is
attainable this year.

GDP per Capita

GDP per capita shows how much economic production value can be

attributed to each individual citizen. Alternatively, this translates to a measure of
national wealth since GDP market value per person also readily serves as a
prosperity measure.

GDP per capita is often analyzed alongside GDP. Economists use this metric
for insight on both their own domestic productivity as well as productivity
compared to other countries. GDP per capita considers both a country's GDP
and its population. Therefore, it can be important to understand how each factor
contributes to the overall result and how each factor is affecting per capita GDP
growth.

Comparative economic forecasts

This dataset provides the growth rates of real per capita GDP, which is
defined as GDP at constant prices divided by the population. The latest available
economic data for the Philippines compared to countries in Southeast Asia.
Philippines's GDP Per Capita reached 4.8% or 3,318.927 USD in Dec 2019,
compared with 4.5% or 3,104.263 USD in Dec 2018. Philippines GDP Per Capita
data is updated yearly, available from Dec 1950 to Dec 2019, with an average
number of 714.850 USD. The data reached an all-time high of 3,318.927 USD in
Dec 2019 and a record low of 177.167 in Dec 1962. CEIC converts annual GDP
per Capita into USD. Philippine Statistics Authority provides GDP per Capita in
local currency. Bangko Sentral ng Pilipinas average market exchange rate is
used for currency conversions. GDP per Capita prior to 1998 is calculated from
Nominal GDP sourced from Philippine Statistics Authority and Population
sourced from the International Monetary Fund.
 In the latest reports, Philippines's GDP expanded 6.486 % YoY in Dec 2019.
Philippines's Nominal GDP reached 103.586 USD bn in Dec 2019. Its GDP
deflator (implicit price deflator) increased 0.384 % in Dec 2019. Gross Savings
Rate of Philippines was measured at 13.544 % in Dec 2019.

GDP Growth Rate

Singapore, having the smallest GDP growth rate, has grown their economy
by 0.7 per cent year on year in 2019 that was far below the 3.1 per cent
expansion in 2018. It is also Singapore’s slowest economic growth since 2009,
when the economy expanded 0.1 per cent year on year. Ms Selena Ling, head of
treasury research and strategy at OCBC Bank, said that the figures confirm that
the Singapore economy bottomed in the second quarter of 2019. While noting
that growth in 2019 was the weakest in a decade, she said there are positives to
take away from a “glass half-full perspective”.

Maybank Kim Eng senior economist Chua Hak Bin highlighted that the
estimates for the manufacturing sector suggest that the Government expects
December’s factory output to remain in contraction territory. The manufacturing
sector contracted by 2.1 per cent in the fourth quarter, continuing the 0.9 per cent
decline in the third quarter. The construction sector grew by 2.1 per cent year on
year in the fourth quarter, slightly slower than the 2.4 per cent in the previous
quarter, on the back of public sector construction activities. The services-
producing industries expanded 1.4 per cent, compared with 0.9 per cent in the
third quarter, supported by the likes of the finance and insurance sector, as well
as the business services sector. Ms Ling said the services and construction
sectors are likely to be the bright spots for 2020. The resilient domestic labour
market, which contributes to consumer confidence and private consumption,
coupled with public sector spending on infrastructure projects including
education, health and social services, remain key supporting pillars for the
Singapore economy. Philippines, having a 6% growth rate has been affected by
factors already mentioned above.

The Cambodian economy remains on track to grow strongly in 2019 despite

a slower-than-anticipated rise in agricultural production. In an update of its
flagship annual economic publication, Asian Development Outlook (ADO) 2019,
ADB retained its forecast of real gross domestic product (GDP) growth for
Cambodia of 7 percent this year and 6.8 percent in 2020. Cambodia's economy
continues to expand at a robust pace due to continued strength in traditional
sectors such as garments, tourism, trade, and construction. With increased
uncertainty in the global trading environment and its impact on services such as
tourism, Cambodia urgently needs a focused diversification strategy into niche
and higher value products and services. This will require reducing risks
emanating from lending to an overheated real estate sector, development of
more skilled and productive workforce to justify rising wages, and attracting high-
quality capital investment-all of which, in turn, need strong governance and
institutions. The report noted risks to production from climate change, saying that
drought in the first half of the year lowered crops and fishery production, reducing
agricultural growth to around 1.1 percent this year. Growth for industry was
robust due to a surge in the production of garment, footwear, and travel goods,
which led to an upward revision from 10.1 percent in ADB's April forecast to 10.6
percent. With lower fuel prices and a small increase in food prices, inflation was
subdued at 1.4 percent year-on-year at the end of June and is expected to
average 2.2 percent for 2019.

COMPARISON OF GDP TREND IN THE PHILIPPINES

The gross domestic product (GDP) measures of national income and output
for given country’s economy. The gross domestic product (GDP) is equal to the
total expenditures for all final goods and services produced within the country in
a stipulated period of time. In the latest reports, Nominal GDP of Philippines
reached 103.6 USD bn im Dec 2019. Its GDP deflator increased 0.4% in Dec
2019. GDP per capita in Philippines reached 3.318.9 USD in Dec 2019. Its Gross
Savings Rate was measured at 13.5% in Dec 2019. The Philippine Statistics
Authority reports that the GDP hits the lowest rate for the last eight years in 2019.
From 6.2% in 2018 to 6% n 2019.

KEY FINDINGS OF 2019 GDP

GDP growth picks up in the 4th quarter of 2019, but the impact of the budget
impasse proves to be too much as the overall target is not met. Philippine
economic growth picks up in the 4th quarter of 2019, but it is still not enough to
lift the overall average. The Philippines' gross domestic product (GDP) grew by
6.4% in the 4th quarter of 2019, but it was not enough to propel the year's
average within the government's target band.

The government aimed for economic growth to hit somewhere between 6%

and 6.5%, but the 2019 average settled at 5.9%, said the Philippine Statistics
Authority (PSA) on Thursday, January 23. This is the slowest growth in 8 years.

GDP growth needed to be at least 6.8% to cling on to the lower end of the
target.Growth was much slower than expected during the first half of the year
due to the delayed passage of the 2019 budget over alleged pork barrel or illegal
funds. The reenactment of the budget meant government underspending of over
P1 billion per day for 4 months and stalled infrastructure projects. The election
ban on certain infrastructure during last years section also took a toll in the
countries GDP. Other factors that also affect the GDP are mild El Nino
phenomenon, African swine fever in Luzon, and the trade war between the
United states and China.

IV. Summary

GDP itself is the primary measure of a country's economic productivity. A

country's economic GDP shows the market value of goods and services it
produces. It helps analyze the overall health of the economy. Legislators use
GDP when making fiscal policy decisions. Central bank economists use GDP as
an important factor influencing monetary policy actions.

In 2019, the GDP of the Philippines grew at 5.9% which missed the
government’s target rate of 6-6.5%. The last quarter brought about a 6.4%
growth in GDP caused by the strong domestic demand and government outlays.
It marked the lowest growth in eight years but the economy of the Philippines
remains as one of Asia's fastest growing economies.
 According to Philippine Statistics Authority the Philippine economy grew by
6.4% in the fourth quarter, its fastest pace for 2019 on the back of robust
household spending and rebound in government spending, but was not enough
to hit the full-year goal. The growth was driven by the ramping up of the
government spending after the budget delay in the first half of 2019.

BSP claimed that the said growth was still impressive amid the backdrop of
slowing global economy.The following are some of the factors that contributed to
the 4th quarter's growth: household spending, government spending, private
investment, export of goods, import of goods, production in the industry,
agriculture, hunting, forestry, and services. Noelan Arbis, a research economist
claimed that there are still risks for Philippine Economy in the year ahead. Slow
implementation of government's infrastructure agenda could impugn on growth.
The Philippines also continues to lag far behind its regional peers in attracting
foreign direct investments because of the corporate tax reform.

In general, even with these uncertain world events, the Philippine economy
continues to be on a fairly good swing. Its sovereign credit ratings remain
sound.There is nothing that is generally unsettling, since all engines of growth
continue to function well for the economy. However, a lot of its economic
relations with the world remains an open book. What could harm it is any
development that worsens the international economy from its rather uncertain
directions of the moment. We trade with all these countries and our investments
are also part of the chain of world investments that link every country.

V. Learning and insights

The Philippines ranked among Asia’s 10 fastest growing economies in 2017.

Consumer power, remittances from overseas workers and an influx of call
centers had given it that status, raising hopes for easing rampant poverty.
However, GDP expansion wobbled in 2018 because of rising prices and lack of
new direct investment.

The Philippine economy grew 6.2 percent last year, down from 6.7 percent in
2017 and 6.9 percent a year earlier. Inflation dented consumption in late 2018.
Changes in GDP is said to be because of a combination of factors. We have
learned that slumps in farming and consumption affects GDP severely. For which
world oil price hikes and rice scarcity raised prices and more than 70 percent of
the $313 billion Philippine economy is said to be coming from consumption, and
people especially the poor mind their spending when prices are up.
The GDP also struggled to grow because of storm damage to crops.

The Philippines in order to get back to track should have a quest for
investors. Because increasing investments there ease poverty. To attract more
capital, the government invests more in infrastructure. There is another important
factor that led to the reduced growth rate phenomenon. They have brought a
degree of uncertainty and caution in the world economy. It is the US-China trade
war. Uncertainty has reduced trade opportunities and has affected the growth of
the international economy. pThe changes that are happening are not bringing
good news for the Philippines because we are not fully positioned to take
advantage of the changing trade realignments, as other countries with strongly
open policies to take advantage of the changes happening.

What could harm it is any development that worsens the international

economy from its rather uncertain directions of the moment. We trade with all
these countries and our investments are also part of the chain of world
investments that link every country. Philippine trade today is highly linked to
China and East Asia, its BPO services to the US and its OFW incomes derived
mostly from the rest of the world. The US is also a major trading partner. What
the policy-makers need to do is to get Congress to speed up the work on tax and
investment reforms under the TRABAHO bills. GDP is said to be no an accurate
measure of growth however GDP also fails to capture the distribution of income
across society – something that is becoming more pertinent in today's world with
rising inequality levels in the developed and developing world alike. It cannot
differentiate between an unequal and an egalitarian society if they have similar
economic sizes.

VI. Source
1. Investopedia.com - Gross Domestic Product by Jim Chappelow, June 27,
2019
2. Investopedia.com - What is GDP and Why is It So Important to Economists
and Investors? by Leslie Kramer, December 2, 2019
3. straitstimes.com
4. focus-economics.com
5. Punongbayan, JC (2020, January 31). [ANALYSIS] Why did Philippine
growth drop to an 8-year low?. Rappler, Retrieved from
https://www.rappler.com/
6. (2020, January 23). Philippines 2019 GDP growth hits 8-year low on weak
farm output, budget delay. The Straits Times, Retrieved from
https://www.straitstimes.com/business/economy/philippines-2019-gdp-growth-
hits-8-year-low-on-weak-farm-output-budget-delay.
7. Bworldonline.com - Jobe E. Hernandez with inputs from Luz Noble and
Beatrice Laforga, January 24, 2020
8. AsianDevelopmentBank.com
9. channelnewsasia.com/news/business/singapore-economy-gdp
10. xinhuanet.com/english/2019-09/25/c_138421318.htm

B. Presentation for oral report

I. The objectives of the presentation are the following:

 To have an in depth knowledge about GDP

 To know the state of the Philippine’s GDP
 To compare the PH’s GDP with other countries
 Have understanding regarding current issues of GDP