To our friends from the media, colleagues in NEDA, ladies and gentlemen, good morning.

I am pleased to welcome you to this year-end media briefing as we revisit the milestones our economy has achieved for the year. As the year ends, we feel it is fitting to recognize how we have constantly been moving forward despite the uncertainties of the global economy, the numerous domestic challenges, and the impact of natural disasters. We have transitioned into one of the most improved economies in Asia the past years, and today we will share with you how we intend to remain on track and accelerate reform initiatives to deepen inclusive development over the longer term.

Allow me to provide you a quick summary of how the Philippines has performed in terms of growth, poverty reduction, and employment, in the past five years of the Aquino administration.

Economic Growth

The stellar performance of the Philippine economy amid global slowdown and the many daunting challenges is well known. Our country’s economy has been growing at an annual average of 6.2 percent as of 2014 since 2010 when the Aquino administration took over. This has been our highest five-year average growth since the mid-70’s. And with the recent performance of our economy for three quarters of this year, we are confident that we shall see this high growth pattern continue and even improve throughout next year and the succeeding administrations, given the reforms and long-term investments in infrastructure and human capital, which we continue to pursue.

Growth was below-target at 3.7 percent in 2011 due to external events that disrupted global supply chains, for example the tsunami in Japan, the severe flooding in Thailand, political stability in some Middle East and African countries, Euro debt crisis, and the sluggish recovery from the financial crisis. Internally, government underspending contributed to the slowdown, as agencies adjusted to new budget processes. We were, however, quick to recover, with GDP expanding by 6.7 percent in 2012. The following year, we grew at an average higher rate of 7.1 percent, despite the devastation brought upon by the Bohol earthquake and Typhoon Yolanda in the Visayas. Growth in 2013 was driven by robust consumer spending and higher investments in view of positive business and consumer sentiment, low interest rates, low inflation, and sustained inflow of remittances from Filipinos overseas, among others. In 2014, economic growth was predominantly private sector-led, indicating increased economic activity in sectors where there are opportunities for better employment. Full-year growth for 2014 reached 6.1 percent.

For 2015, we are so far growing at an average of 5.6 percent, that is for the first nine months, with 6.0 percent growth in the last quarter due to strong domestic demand, more jobs and more public and private investments. This puts the Philippines as one of the fastest-growing major economies in Asia, just after India, China and Vietnam. Our year-to-date performance reflects a steadily growing economy, and we are very optimistic that the Philippine economy will grow at 6.0 percent for full-year 2015.

In terms of sectoral growth, we have seen the continued strengthening of the industry and manufacturing sectors. This was evident for eight quarters from the second half of 2012 until 2014, when growth of the industry sector outpaced the growth of the services sector. This trend is consistent with our strategy to promote the resurgence of industry and the manufacturing subsector. But the services sector, particularly the IT-Business Process Manangement, also remained robust. The tourism subsector has also recovered from the Bohol and Cebu earthquakes and Typhoon Yolanda in 2013.

The country has now risen in terms of global rankings. According to the latest World Economic Forum Global Competitiveness Report, the Philippines now ranks Number 47, a huge leap from Number 85 back in 2010. This makes us the most improved economy in the ASEAN region and across the world in terms of competitiveness rankings over the last half-decade.

Poverty and Employment

Since the beginning of this administration, expenditures on social services, particularly education, health, social security and housing, have shown significant improvement, indicating our serious thrust of heavily investing in human capital development. Social services expenditures per person during the last five years, even when adjusted for inflation, are now 37-percent higher on average than in 2005-2009. For education, it is up by 25 percent; for health it is up by 116 percent or more than double. For social security and housing, it is up by 70 percent and 113 percent, respectively. Worth noting is the Pantawid Pamilyang Pilipino Program, which now supports a total of 4.35 million households, covering 143 cities and 1,484 municipalities in 79 provinces as of August 26, 2015 .

However, while the Philippine economy has been growing at a rapid pace in the last five years, much still has to be done to achieve even faster poverty reduction and more inclusive growth.

For one, although many of the Millennium Development Goals were achieved by the country over the years, we still face challenges in areas such as reducing income poverty, providing universal access to reproductive health, improving children’s completion rate of primary school, raising the literacy rate among Filipinos aged 15-24 years old, and reducing maternal mortality.

With respect to employment, figures continue to improve. The latest Labor Force Survey showed a new 10-year record low unemployment rate at 5.7 percent, primarily owing to the boost in the services and industry sectors. This is the first time that the unemployment rate dropped below 6.0 percent, even better than the target set in the Philippine Development Plan of 6.6 to 6.8 percent. The underemployment rate also improved, mostly among the wage and salary workers, while employment rate also grew, reaching about 39 million.

Despite the improved figures, we still need to further improve the quality of jobs available in the market and upgrade the skills of our labor force. This is the bigger challenge. Sustained increases in labour incomes can only come about by raising productivity. This entails moving labour from low-productivity sectors to high-productivity ones. In the history of modern nations, no country has ever been able to achieve sustained, rapid growth in per capita incomes without undergoing a structural transformation. This calls for substantial increases in investments, both in physical and human capital.

Outlook for 2016 and Beyond

Taking into consideration the 6.0-percent GDP growth during the third quarter of 2015, we expect our high growth trajectory to continue in the fourth quarter of the year as domestic demand continues to be strong. Together with the recovery of advanced economies expected next year and of the global economy in the medium-term, economic growth can accelerate to a level that can bring us to higher middle-income economy status by the end of the next administration.

To make this happen, we need to continue to pursue policies and programs that will improve industries’ competitiveness and productivity and further increase investments in human capital development.

For the years ahead, it is critical for our country to be able to take advantage of its relatively young population joining the labor force in the next decade. Again, we cannot overemphasize the need to invest in our people to enable Filipinos to seize employment opportunities or become entrepreneurs, thereby increasing incomes and improving the quality of life.

We also should continue to develop the country’s infrastructure, encourage technological innovation, and pursue regulatory and structural reforms to unleash the country’s potentials and maximize gains from regional integration. Through these, the country can further attract investment flows, as investors in advanced economies affected by the global financial crisis search for markets with higher returns and better prospects. The Philippines can also continue to tap advanced economy markets, particularly through preferential trading relations, thereby increasing the volume and value of our external trade.

The prospects for the travel and tourism sector also remain bright and its positive contribution to economic growth is seen to continue until the next decade. Hence, we should continue initiatives to improve physical connectivity and peace and order in the country to benefit from this growing demand.

Importantly, with the frequent occurrence of natural disasters and the reality of climate change, we need a strong disaster risk management program that will mitigate the impact of weather disturbances on employment, particularly in the agriculture sector, which employs around one third of our work force. We will need to invest heavily in socioeconomic resiliency, and this includes disaster preparedness, income diversification, social protection and employment insurance.

Reforms in the bureaucracy and the elimination of numerous unnecessary and irrelevant laws and regulations that slow down delivery of public services and program implementation are equally important. These will enable the government to be more responsive and adaptive to changing needs and preferences and to continue to be both a source of growth and a facilitator of private sector economic activities.

Indeed, we must continue to strengthen and improve the nation’s institutions, including political ones, as they play a critical role in the development process. A peaceful and credible transfer of power in 2016 will ensure continuity of growth. We have made significant long-term investments and initiated important reforms whose results may not be immediately felt. We hope that the next administration will continue and further deepen these reforms, careful not to lose sight of the long-term, even while immediate needs are addressed.

With this said, I would like to thank our friends from the media for being our partners in the shared agenda of attaining inclusive growth for the country–growth where prosperity is felt across all social strata, and growth where no one is left behind. Thank you for the vigilance and all your hard work in reporting and disseminating vital information about our economy to the public.

Maligayang Pasko at mabuhay tayong lahat!

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