2014年-IMF国际货币组织全球_Philippines_Selected_Issues_42页_3mb

Summary of the Selected Issues Paper on the Philippines

Core Content

This document is a Selected Issues paper on the Philippines, prepared by the International Monetary Fund (IMF) staff team. It examines the drivers of inflation in the Philippines and analyzes employment challenges and financial inclusion in the country.

Main Views and Key Information

Philippine Inflation: Home Grown or Imported?

A. Introduction

• Global inflation has remained low since 2000, with reduced cross-sectional variation.
• The Philippines has experienced moderated inflation despite strong GDP growth and high capacity utilization, closely tracking world inflation.
• The paper investigates whether inflation in the Philippines is driven by domestic macroeconomic conditions or global factors.
• It uses a latent factor model to decompose inflation into common and idiosyncratic components.

B. Philippines: Inflation Developments and the Monetary Policy Framework

• Since 2002, the Bangko Sentral ng Pilipinas (BSP) has followed an inflation targeting framework, aiming to maintain price stability.
• Inflation averaged 4.3% from 2002 onwards, significantly lower than the 9.2% in the 1990s.
• Inflation was often outside the target band but has become more consistent since the Global Financial Crisis (GFC).
• In 2012-13, inflation was near the lower bound of the target band (4±1%).
• In May 2014, inflation rose to 4.5% due to typhoon-related food supply disruptions, peso depreciation, higher administered rice prices, and accommodative monetary conditions.
• The BSP plans to lower the midpoint of the inflation target band to 3% in 2015, aligning it with other advanced emerging markets.

C. Common-Factors Analysis of Global Inflation

• A common factor model (CFM) is used to identify unobserved common factors that explain inflation comovements across 62 countries.
• The model decomposes inflation into a common-origin component and an idiosyncratic component.
• The first three common factors explain 62% of the total variability in global inflation.
• Common Factor 1 is associated with global commodity prices (especially food and fuel), with the Philippines having a high loading (0.667).
• Common Factor 2 reflects the "great moderation" in inflation, with the Philippines having a negative but small loading.
• Common Factor 3 relates to the U.S. dollar nominal effective exchange rate (NEER), with the Philippines showing a positive and relatively large loading.

D. Modeling Inflation in the Philippines: A Single-Country, Single Equation Approach

• A Phillips Curve model is estimated to assess inflation drivers, incorporating world commodity prices, the nominal exchange rate, and the output gap.
• The model suggests that:
  • Inflation persistence accounts for a significant portion of inflation.
  • Global commodity prices (food and fuel) and the exchange rate pass-through are major drivers.
  • The output gap also plays a role in explaining inflation dynamics.
• The model is used to conduct out-of-sample forecasts and assess consistency with the medium-term inflation target.

Key Findings

• Global common factors account for about 60.7% of the variability in Philippine inflation, with the remainder attributed to idiosyncratic shocks.
• Idiosyncratic inflation in the Philippines has shown significant deviations, especially during the GFC and its aftermath.
• The Philippines' inflation is influenced by:
  • Exchange rate pass-through
  • World commodity prices (particularly food and fuel)
  • Output gap
  • Lagged own inflation
• The BSP's inflation target is being adjusted to 3% in 2015 to align with other advanced emerging markets, aiming to reduce real appreciation due to inflation differentials.

Employment Challenges in the Philippines

• The Philippines faces employment challenges due to:
  • Demographic pressures: A growing working-age population.
  • Labor market dynamics: Changes in employment growth and underemployment.
  • Labor force participation: Trends in employment by sector and the nature of employment.
  • Unemployment: Differences by educational attainment and age group.
• Overseas Filipino Workers (OFWs) play a crucial role in the labor market, contributing to employment and remittances.
• Wage dynamics: Minimum wage and salary base rate trends, as well as unit labor costs.
• Policy implications: The need to address structural issues in the labor market, including underemployment and wage rigidity, to improve employment outcomes.

Financial Inclusion in the Philippines

• Financial inclusion in the Philippines is measured through:
  • Household borrowing from non-formal sources.
  • Bank lending to micro, small, and medium enterprises (MSMEs) and agriculture.
  • Interest rates and spreads across different types of banks.
• Key findings:
  • The Philippines has a moderate level of financial inclusion.
  • Microfinance and retail lending are important components.
  • There is variation in financial inclusion across different sectors and regions.
• Policy implications: Improving access to formal financial services and promoting inclusive growth through targeted lending and financial literacy.

Conclusion

• The Philippines' inflation is a combination of global common factors and domestic idiosyncratic shocks.
• The BSP's inflation targeting framework has been effective in maintaining price stability, though challenges remain in achieving the new target without compromising GDP growth.
• Employment challenges are linked to demographic trends and structural issues in the labor market, requiring policy interventions.
• Financial inclusion is an important aspect of economic development, with room for improvement in access to formal financial services.

Figures and Tables

• Figures include:
  • Total inflation trends (2000-2013)
  • Inflation target bounds for the Philippines and ASEAN neighbors
  • Common factors and their loadings for global inflation
  • Decomposition of inflation into common and idiosyncratic components
  • Employment growth, underemployment, and wage trends
  • Financial inclusion metrics and bank lending patterns
• Tables include:
  • Regression results of the Phillips Curve model
  • Labor outcomes and percentile rankings of efficiency indicators
  • Coefficients from unemployment and underemployment regressions

References

• The paper cites several studies and reports, including those by Sargent and Sims (1977), Stock and Watson (1989), and others related to inflation modeling and financial inclusion.