MACROECONOMICS 1 (ECON 1192) PAIR

ASSIGNMENT

MACROECONOMICS DATA ANALYSIS 2.1

Student : Truong Thao Nhi (s3651027)

Nguyen Tran Ngoc Nguyen (s3678930)

Lecturer: Mr.Thai

1.
a.
 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP 5.03 5.24 5.30 5.70 5.91 6.31 6.75 7.17 7.60 8.12 8.67
(constant E+12 E+12 E+12 E+12 E+12 E+12 E+12 E+12 E+12 E+12 E+12
LCU)

GDP 6.89 7.72 8.03 9.00 9.71 1.06 1.15 1.26 1.33 1.45 1.58
(current E+12 E+12 E+12 E+12 E+12 E+13 E+13 E+13 E+13 E+13 E+13
LCU)
Table 1: Philippines annual GDP (2007-2017)
Source from the World Bank

Figure 1: Philippines annual GDP (2007-2017)

Source from the World Bank

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP deflator 137. 147. 151. 157. 164. 167. 170. 176. 175. 178. 182.
(base year 0789 4271 5156 9131 264 4973 9234 3202 286 2643 4013
varies by
country)
Table 2: Philippines GDP deflator (2007-2017)
Source from the World Bank
 Figure 2: Philippines GDP deflator (2007-2017)
Source from the World Bank

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

GDP growth 6.61 4.15 1.14 7.63 3.65 6.68 7.06 6.14 6.06 6.87 6.68
(annual %) 6662 2757 8332 2265 9752 3819 4024 5299 6549 5715 4518
Table 3: Philippines GDP growth (2007-2017)
Source from the World Bank

Figure 3: Philippines GDP growth (2007-2017)

Source from the World Bank

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Gross savings 43.9 43.2 46.6 48.0 44.9 43.2 45.0 46.0 44.2 43.7 43.9
(% of GDP) 6468 3788 4062 7973 0042 4996 5678 9956 2203 9467 9758
Table 4: Philippines gross savings (2007-2017)
Source from the World Bank

Figure 4: Philippines gross savings (2007-2017)

Source from the World Bank

b. Philippines' annual GDP line graph during 2007 to 2017 shows there are two
differences in the trend of NGDP and RGDP. To be more specific, the nominal GDP
is increasing significantly while the real GDP is rising slightly. Moreover, the distance
between two lines from 2012 until 2017 is expanding.
According to John Margun (2008), he stated that the monetary value of the peso of
Philippines is depreciating leading to the inflation in 2008 by increasing the price of
fuel. Therefore, this reflects the nominal GDP is higher obviously than the real GDP.
Furthermore, the annual growth rate is seen as the real GDP so the rate increases
means the real GDP also rises. For instance, the average annual growth rate of
Philippines is 3.68 percent until 2017 (Panos Mourdoukoutas, 2017). Thus, it is
clearly seen that both of two lines goes up. Another difference is represented in
figure 2. Because of the growth of GDP deflator, the gap between the nominal GDP
and real GDP is gradually larger. It is illustrated in table 2 that in 2007 the value is
137.0789, whereas in 2017 the value is 182.4013.

c.
 Figure 5: Components of Philippines GDP in 2017

Figure 6: Components of Philippines GDP (2007 to 2017)

The largest of four components is the household final consumption expenditure with a
value of 73.26218176%. In fact, The household expenditure grows sharply due to the
increase in remittances. For example, the amount of remittances sent to the Philippines
reached 31.29 billion dollars, which is the highest transfer amount of all time in 2017
(Schnabel, C 2018). Moreover, the additional rents of Filipinos leads to the increase in
consumer spending due to low tax rates (Lopez, M 2018). As shown in figure 6, the
component which has the most fluctuated is gross capital formation. In general, the line
is increasing. However, there is a remarkable decline in 2009 and a somewhat sinking in
2012, then the line grows slightly until 2015. Finally, a notably rise happens from 2015 to
2016 and next the line goes up slightly again until 2017, that year has the highest
percentage of GDP during the period from 2007 to 2017.

d. GDP is the primary measure of a country's economy. GDP depends on the

consumption, investment, government purchases and net exports so if there is all
 four factors increase, GDP also grows. According to Korea Exposé 2017, Korea
today is a prosperous country, in contrast to half a century ago, it is one of the
poorest countries in the world. Korea’s net export rises through exporting. For
example, after receiving aid from foreign countries like the US, the Korean
government intensified industrial production such as electricity, textiles and cement
and other items such as fertilizers and steel to reduce imports (Federal Research
Division, 1990). Next, Korean government uses earned profits to increase
government purchases component. For instance, in 2010, the South Korean
government spent 7,6 percent of its GDP on education, more specifically, according
to South Korea's Ministry of Education, 17,9 billion dollars was invested in private
tuition fees in 2012 (ICEF Monitor, 2014). Another component helps restart the
Korea's economy. To illustrate, major corporations specializing in electronics,
automotive and steel including famous brands such as Samsung, Hyundai and LG
bring Korea to a large global platform (Premack, 2017). Korean can find more jobs
from the emergence of well-known company and gain the revenue to spend on
consumption like education. According to ICEF Monitor 2014, consumer spending on
education accounted for 12% in 2012. After all ideas above, low income countries
can grow faster than and catch up with high income countries.
2.
a. The working age of Germany (15-64) will be declined by 6.7% in 2015-2030
(Euromonitor, 2018). The population itself has been steadily aging for the past
decades. Therefore, one of factors of making the economy growth is labour
will decrease and affect strongly to the government's budget. In reality, both
deficit and debt are rising at the moment. In 2010, the deficit was even
negative ( -4.2%), but it keeps rising to 1.3% (2017) and in 2032, it is
predicted to be equal to the limit of EU (3%) and thrice by the end of 2040s
(9%). Following that, the debt of GDP will be start raising, 80% (2040) and
208% (2060). These datas are defeated the current debt-to-GDP ratio of
Greece and not showing any sign to stop growing. When the budget deficit
increases, the supply of loanable funds will decrease. This just makes the
interest rate decreases and can not satisfy the demand of loanable funds.

b. Technology is one of the factors affect the productivity and supports human
capital in producing output. In the formula, labour and machinery are
contributed the most, however based on Germany’s situation the production
(Y) might drop in the long run, along with consumption (C) and government
 (G) may slightly drop also due to the aging problem, the Investment (I) can be
decreased. According to the threads, the inventories decline, which can make
I declines. If this scenario happens in a long run, the GDP and government
budgets might not be increased any moment. At the moment, G < tax
because of the budget deficit. With all these reasons, in the long run, the
supply of loanable funds will drop whereas the demand will increase. As a
result, businesspeople do not have capital to develop or start-up their
organisations, which is not good for economy’s growth. Both saving and bank
money rates will low due to low interest rate, but the determine of investment
will be opposite.
c.
d. Remaining or reducing tax will be the worst scenario for government’s budget,
increasing it will help stability the budget deficit and the demand of loanable
funds (Börsch-Supan, 1995). However, in the long run, aging population
causes the lacking of labour also the consumer per day affecting saving and
investment. Moreover, government’s budget tends to increasing demand in
using in finance social expenditures, such as pension.

Reference lists:

● Mangun, J 2008, ‘Inflation may cause a Philippine disaster - John Mangun’, ABS-
CBN News, viewed 4th August 2018, <http://news.abs-cbn.com/views-and-
analysis/06/10/08/inflation-may-cause-philippine-disaster-john-mangun>.
○
● Mourdoukoutas, P 2007, ‘Duterte's Philippines Is The 10th Fastest Growing Economy
In The World’, Forbes, viewed 4th August 2018,
<https://www.forbes.com/sites/panosmourdoukoutas/2017/06/20/dutertes-
philippines-is-the-10th-fastest-growing-economy-in-the-world/#60ee41b58874>.

● Schnabel, C 2018, ‘PH remittances beat gov't target, hit record in 2017’, Rappler,
viewed 4th August 2018, <https://www.rappler.com/business/196148-philippines-ofw-
remittances-december-2017>.

● Lopez, M 2018, ‘Consumer spending seen driving GDP growth to 7%’, Business
World, viewed 4th August 2018, <http://www.bworldonline.com/consumer-spending-
seen-driving-gdp-growth-7/>.

● Smith, L 2018, ‘Does High GDP Mean Economic Prosperity?’, Investopia, viewed 4th
August 2018, <https://www.investopedia.com/articles/economics/08/genuine-
progress-indicator-gpi.asp>.

● Korea Exposé 2017, ‘How Did South Korea Become So Rich?’, Korea Exposé,
viewed 4th August 2018, <https://www.koreaexpose.com/how-did-south-korea-
become-so-rich/>.
● Federal Research Division 1990, ‘The postwar Economy’, viewed 4th August 2018,
<http://www.country-data.com/cgi-bin/query/r-12240.html>.

● ICEF Monitor 2014 ‘High performance, high pressure in South Korea’s education
system’, viewed 4th August 2018, <http://monitor.icef.com/2014/01/high-
performance-high-pressure-in-south-koreas-education-system/>.

● Premack, R 2017, ‘South Korea’s Conglomerates’, SAGE businessresearcher,

viewed 4th August 2018, <http://businessresearcher.sagepub.com/sbr-1863-103804-
2830718/20170821/south-koreas-conglomerates>.
● Euromonitor, 2016, Germany in 2030: The Future Demographic, view 4th August
2018, <https://www-portal-euromonitor-
com.ezproxy.lib.rmit.edu.au/portal/analysis/tab>

● Axel Börsch-Supan, 1995, The Impact of Population Aging on Savings, Investment

and Growth in the OECD Area, view 4th August 2018, <https://ub-madoc.bib.uni-
mannheim.de/1062/1/512.pdf>