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TABLE OF CONTENTS

I. Macroeconomic Performance . . . . . . . 1

Inflation . . . . . . . . . . 1

Exports . . . . . . . . . 3

Labor and Employment . . . . . . . 5

II. Agriculture, Forestry and Fishery Sector Performance . . . 6

Palay . . . . . . . . . 6

Corn . . . . . . . . . 6

Major Fruits . . . . . . . . . 7

Major Crops . . . . . . . . . 7

Fishery . . . . . . . . . 8

Forestry . . . . . . . . . 8

III. Trade and Industry Services Sector Performance . . . . 9

Mining . . . . . . . . . 9

Business Name Registration . . . . . . . 11

IV. Services Sector Performance . . . . . . . 12

Tourism . . . . . . . . . 12

V. Peace and Security . . . . . . . . 13

VI. Development Prospects . . . . . . . 14

1

October November December

2018 6.2 5.6 4.2

2019 -0.4 0.7 2.2

-101234567

MACROECONOMIC PERFORMANCE Headline Inflation Slowed Down The headline inflation in the region eased to its slowest pace during the month of October, further dropping to -0.4 percent from the -0.3 percent recorded in September. This is below the target of the Bangko Sentral ng Pilipinas (BSP), which is pegged at 3.0 percent ± 1.0 percentage point. The drop in inflation rate is due to the decline in the year-on-year change in the Consumer Price Index (CPI) for heavily weighted food and non-alcoholic beverages, which dropped to -3.6 percent in October 2019 for the entire region. The market price of rice continued to decline, as expected from the implementation of the Rice Tariffication Law. Likewise, the price of pork products also declined as the demand decreased due to the outbreak of the African Swine Flu. The Department of Energy observed in October that there had been a general decline in world oil prices1. This is in line with the International Monetary Funds’

(IMF) monitoring that there had been a decline in global oil demand, which resulted to an overall drop in oil prices during the same period. In the Philippines, this was reflected through a decline in the year-on-year change of the CPI of transport commodities, dropping to -0.2 percent in October 2019. As expected, the headline inflation picked up in December at 2.2 percent as the Christmas season induced more spending from consumers. Nonetheless, this figure was still below the ideal target of the BSP. Meanwhile, the easing of price pressures prompted the central bank to cut its interest rates by 25 basis points2 and reduce the required bank reserves in September 2019. This move was done to allow investors to borrow money at a cheaper rate and stimulate the national economy, which expanded by 5.5% only in August 2019 against the initial 6.0-7.0% target.

Figure 1. Inflation Rate for Caraga

2

Food andNon-

AlcoholicBeverages

TransportClothing and

FootwearCommunicat

ion

Housing,Water,

Electricity,Gas

Restaurants HealthRecreationand Culture

Furnishings,HouseholdEquipment

EducationAlcoholic

Beverages,Tobacco

October -3.6 -0.7 0.6 1.0 1.7 3.1 3.2 3.5 5.1 11.2 16.3

November -2.5 0.2 1.4 1.1 3.5 4.6 3.8 4.0 5.0 11.2 17.4

December -0.2 4.5 1.4 0.4 3.7 4.8 3.9 4.0 3.3 11.2 17.3

-5.0

0.0

5.0

10.0

15.0

20.0

Source: PSA Caraga

Figure 2. Year-on-Year Changes of the Consumer Price Index in Percent by Commodity Group (2012-00) Source: PSA Caraga

Figure 3. Real GDP Growth of World Economies

Source: IMF

1 Department of Energy. (2019, October 22). Oil Monitor as of 22 October 2019. Retrieved from

https://www.doe.gov.ph/oil-monitor/oil-monitor-22-october-2019.

2 Noble, L. (2019, September 27). BSP slashes key rates a third time. Retrieved from

3

October November December

2018 55,821.79 61,050.15 25,131.58

2019 119,071.33 - -

-

20,000.00

40,000.00

60,000.00

80,000.00

100,000.00

120,000.00

140,000.00

October November December

2018 2,836,877.00 3,754,157.00 3,066,313.00

2019 585,000.00 - -

-

500,000.00

1,000,000.00

1,500,000.00

2,000,000.00

2,500,000.00

3,000,000.00

3,500,000.00

4,000,000.00

https://www.bworldonline.com/bsp-slashes-key-rates-a-third-time/

Foreign Exports Doubled, Imports Declined

Both export volume and value doubled in October 2019, reaching USD 119 Million compared to USD 55 Million recorded during the same period in 2018. Among other factors, demand for local goods have increased in export markets as domestic goods are perceived to be cheaper and attractive. Contributory to the increase in region’s exports is the reactivation of the nickel export activities at the port of San Roque Metals Inc. in Tubay, Agusan del Norte. Likewise, China and Japan’s high

demand for nickel ore prompted export volume to also increased in the ports of Surigao. On the other hand, import volume and value declined by 6 percent and 79 percent, respectively in October 2019 compared to the volume and value of imports in October 2018. The combined effect of the increase in exports and decrease in imports indicates an expansion in the region’s trade surplus.

Figure 4. Export Value in Caraga (in USD) Figure 5. Import Value in Caraga (in USD)

Source: PSA Caraga Source: PSA Caraga

4

Outbound Domestic Cargo Throughput in Agusan Ports Increased, Inbound Decreased The domestic inbound and outbound cargo throughput in Agusan followed the general foreign trade trend movements in the last quarter of 2019. The cargos outbound from Agusan increased by 36.35 percent. This is attributable to the increase in outgoing cargos of sand and gravel to be used in the construction of roads and bridges. There was also an increase in container traffic due to the rise in shipments of numerous volumes of other general cargos and wood by-products, such as lumber, which are bound for Manila and Cebu. The increase in shipment of fruits and vegetables also contributed to the increase in the outbound throughput. Meanwhile, domestic cargos incoming to Agusan decreased by 35.50 percent in 2019 compared to same quarter in 2018

due to multiple reasons. The breakbulk incoming cargo decreased by 42.64 percent since San Miguel Corporation temporarily halted the shipment of their bottle cargos due to the siltation at the mouth of the Agusan River, which is the main passageway of their barge. The volume of refined petroleum products unloaded at the port of Shell Cabadbaran and Nasipit Port also decreased during the same period. Lastly, there had been slow to zero growths recorded in the shipment of iron and steel products during the last quarter of 2019. On the other hand, overall domestic imports in the ports of Surigao expanded by 17.74 percent due to the large importation of sulfur and other inorganic fertilizers.

Table 1. Domestic Inbound and Outbound Cargo Throughput in Agusan (in MT)

2018 2019 YOY Change

Inbound 278,891.11 179,871.54 -35.50%

Outbound 201,711.71 274,840.53 36.25% Source: PPA Agusan

Table 2. Domestic Inbound Cargo Throughput in Surigao (in MT)

2018 2019 YOY Change

Inbound 8,500,950.00 10,008,936.00 -17.74% Source: PPA Surigao

5

Unemployment Rate Increased The Philippine Statistics Authority (PSA), through its quarterly Labor Force Survey (LFS) released last October 2019, reported an increase in the number of Caraganons who are unemployed during the last quarter of 2019, a rise to 4.6 percent from 4.0 percent in the same quarter the previous year. This translates to approximately 55,000 unemployed workers in the region. The employment rate also dropped from 96.0 percent in 2018 to 95.4 percent in 2019. Nevertheless, the underemployment rate significantly improved to 17.0 percent in 2019 from 21.4 percent in 2018, which indicates that more Caraganons are working full-time.

Meanwhile, LFS results for the entire Philippines show that the country’s employment and unemployment rates stand at 95.5 percent and 4.5 percent, respectively. This translates to an increase in the national employment rate by 0.6 percent and a remarkable 12.0 percent decline in the unemployment rate. While the country’s employment rate is increasing and unemployment rate is decreasing, the opposite can be said for the region, partly due to differences in national and regional labor market dynamics.

Table 3. Labor Force Survey Results

Philippines Caraga

2018 2019 Growth Rate 2018 2019 Growth Rate

Employment Rate

94.90

95.50 0.63%

96.00

95.40 -0.62%

Unemployment Rate

5.10

4.50 -11.76%

4.00

4.60 15.00%

Underemployment Rate

13.30

13.00 -2.26%

21.40

17.00 -20.56% Source: PSA Caraga

6

7

Agusandel

Norte

Agusandel Sur

Surigaodel

Norte

Surigaodel Sur

DinagatIslands

2017-2018% change

-10.26% 6.19% 38.04% -19.84% -0.89%

2018-2019% change

-7.75% -37.50% 1.42% -31.96% -64.65%

-80.00%-60.00%-40.00%-20.00%

0.00%20.00%40.00%60.00%

Agusandel

Norte

Agusandel Sur

Surigaodel

Norte

Surigaodel Sur

DinagatIslands

2017-2018% change

-13.02% 19.58% 5.00% 4.16% 60.40%

2018-2019% change

-79.53% 1.03% 16.78% -17.76% -47.53%

-100.00%-80.00%-60.00%-40.00%-20.00%

0.00%20.00%40.00%60.00%80.00%

Figure 6. Year-on-Year Change of Palay Production in Caraga

Figure 7. Year-on-Year Change of Corn Production in Caraga

Source: PSA Caraga

Source: PSA Caraga

AGRICULTURE, FORESTRY AND FISHERY

SECTOR PERFORMANCEB

OR Palay and Corn Production Declined While the average farm gate prices of palay remained at Php 15.54 per kilo during the last week of 2019, the region’s total palay production decreased. Agusan del Sur, which is Caraga’s major producer of palay, saw a decline in its production by 37.5 percent to 71,202 M.T. in the fourth quarter of 2019 from 131,921 M.T. posted in 2018. Meanwhile, the year-on-year growth rate of the corn production slowed down in 2019. Corn produced by Agusan del Sur, which is the major producer of corn in the region, increased to 57,377 M.T. in the last quarter of 2019 from 56,793 M.T. in 2018. Nonetheless, the growth in production is only 1.02 percent

compared to the 19.58 recorded in 2018. Corn production in Agusan del Norte also dropped by 79.53 percent, Dinagat Islands by 47.53 percent as well as Surigao del Sur by 31.96 percent. The National Food Authority reported a decline in the rice stock inventory for Caraga in the fourth quarter of 2019. This was due to the delayed arrival of imported rice from Thailand and Vietnam which were earmarked to augment the rice inventory and supplement rice distribution in the region. Likewise, with the enactment and implementation of RA 11203, the suspension of the rice importation lowered the region’s total rice inventory.

8

Banana Mango Calamansi Pineapple

2018 71,479.48 6,661.87 3,424.00 224.94

2019 76,866.74 6,665.60 3,587.15 256.90

-

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

90,000.00

Abaca Coffee Coconut Rubber

2017-2018% change

6.81% 8.93% 4.94% 20.07%

2018-2019% change

1.92% 4.73% -4.97% 1.64%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

Production of Major Fruits Increased, Major Crops Decreased A slight increase in the production of major fruits such as Banana, Mango, Calamansi, and Pineapple was observed during the last quarter of 2019 compared to the same period the previous year. On the other hand, there was a significant decline in the year-on-year growth rate in the production of

major crops, coconut and rubber in particular. Coconut production dropped by -4.97 percent. Similarly, rubber production slowed down as its growth rate decelerated to 1.65 percent in 2019 from the 20.07 percent posted in 2018.

Figure 8. Volume of Production of Major Fruits in Caraga (in M.T.)

Source: PSA Caraga

Figure 9. Year-on-Year Change of Major Crops Production in Caraga

Source: PSA Caraga

9

19,779.28

21,080.82

18,164.64

16,500.00

17,000.00

17,500.00

18,000.00

18,500.00

19,000.00

19,500.00

20,000.00

20,500.00

21,000.00

21,500.00

2017 2018 2019

Agusan delNorte

Agusan delSur

Surigao delNorte

Surigao delSur

DinagatIslands

2018 23,793.00 2,940.00 - 2,023.00 -

2019 72,517.00 19,603.13 - 8,069.00 -

-

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

Fisheries Production Declined The volume of fishery production in the region dropped by 13.83 percent to 18,164.64 M.T. during the last quarter of 2019 compared to the 21,080.82 M.T. recorded in 2018. Among others, El Niño is seen to be a factor to such outcome given that said phenomenon

started back as early as the last quarter of 2018. Warm water temperatures caused by El Niño prompt sea animals to move to colder and deeper waters which consequently result to challenges in fishery production.

Figure 10. Volume of Production of Fisheries in Caraga (in M.T.)

Source: PSA Caraga

Manufactured Forest Products Increased There was a 248 percent increase in manufactured forest products during the last quarter of 2019 compared to 2018. Among others, the high demand for

wood by-products boosted the manufacturing of forest products in the region.

Figure 11. Manufactured Forest Products in Caraga in (M.T.)

10

Volume ofProduction

Value ofProduction

Export Volume Export ValueEmploymentGenerated

ADN: Nickel Ore 111.55% 32.03% 23.76% 88.56% -8.64%

SDN: Nickel Ore 60.82% 136.99% 36.99% 7.75% 18.06%

SDS: Nickel Ore 35.94% 83.62% 12.22% 50.71% -28.42%

PDI: Nickel Ore 27.00% 41.16% 23.77% 52.54% -17.35%

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

120.00%

140.00%

160.00%

Source: DENR Caraga

TRADE AND INDUSTRY SERVICES SECTOR

PERFORMANCE

Nickel Ore Production Expanded

Nickel ore production for all provinces in

Caraga increased remarkably during the

last quarter of 2019 compared to the

same quarter in 2018. Production in

Surigao del Norte, which is the major

nickel ore producer in the region, grew

by 60.82 percent in the fourth

quarter of 2019 at 2,118,443.52 DMT

from 1,317,271.12 DMT in 2018. Value

produced by the said province also

increased by 136.99 percent to

PhP 4.7 Billion from PhP 1.9 Billion recorded during the previous year.

Meanwhile, nickel ore production in

Agusan del Norte grew the most by

111.55 percent and earned 88.56

percent more from exports.

Despite the increase in volumes and

values of production, the jobs generated

by the mining sector declined.

Employment in Surigao del Sur

decreased by 28.42 percent despite the

increase in production by 35.94 percent

and value growing by 83.62 percent.

Employment in mining also decreased in

the Province of Dinagat Islands by 17.35 percent.

Figure 12. Year-on-Year Growth of Nickel Ore Production in Caraga (2018-2019)

Source: MGB Caraga

11

Gold Production Declined, Silver Production Increased

Gold production in Agusan del Sur, the

only province mining gold and silver in

the region, declined by 10.07 percent

from 719.11 Kg in the last quarter of

2018 to 646.70 Kg in 2019.

Nevertheless, the value of production still grew by 6.58 percent.

On the other hand, production of silver

grew by 15.25 percent while production

value increased by 36.67 percent.

Export of silver also grew by 36.87

percent, which is attributable to the

increase in export value by 65.88

percent to PhP 5.3 Million from PhP 3.2 Million.

Figure 13. Year-on-Year Growth of Gold and Silver Production in Agusan del Sur (2018-2019)

Source: MGB Caraga

Gold Silver

Volume of Production -10.07% 15.25%

Value of Production 6.58% 36.67%

Export Volume 5.58% 36.87%

Export Value 19.20% 65.88%

Employment Generated 7.46% 7.46%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

70.00%

12

Agusandel Sur

Surigaodel Norte

Agusandel Norte

Surigaodel Sur

DinagatIslands

2018 73.42 118.42 33.86 6.82 0.42

2019 645.91 607.95 44.37 29.70 12.00

-

100.00

200.00

300.00

400.00

500.00

600.00

700.00

Agusandel Sur

Agusandel Norte

Surigaodel Sur

DinagatIslands

Surigaodel Norte

2018 365.51 69.29 15.90 0.93 4.64

2019 227.96 70.74 31.40 15.00 8.31

-

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

Investments from New Business Registrations Grew Investments from new business registrations in the region grew by 475 percent in the fourth quarter of 2019 compared to the same quarter in 2018. All five provinces posted positive investment growths, where the Province of Dinagat Islands gained 2,757 percent rise in investments, which is the highest among the provinces. This was followed by Agusan del Sur at 780 percent, Surigao del Norte at 413 percent, Surigao del Sur at 335 percent, and Agusan del Norte at 31 percent. Worth noting is the proposed opening of the multi-billion Silangan Mindanao Mining Project in Surigao del Norte, whose commercial operation is targeted to commence by July 2022. The number of new business registrations in the region also increased by 8.54 percent to 1,564 new businesses in the fourth quarter of 2019

compared to the 1,441 new businesses during the same period in 2018. Contributory are the increases in new business registrations in Surigao del Norte at 25.21 percent, Surigao del Sur at 10.55 percent, Province of Dinagat Islands at 9.68 percent, and Agusan del Sur at 6.09 percent. These new businesses translate to 4,175 jobs generated in the region, which is a 20 percent increase from the fourth quarter in 2018. Nonetheless, despite the rise of new business registrations, domestic sales in the region dropped by 23 percent in the last quarter of 2019 compared to the same quarter in 2018. This equates to PhP 102 Million decrease in domestic sales. The said decrease was largely influenced by Agusan del Sur, which is the only province with negative domestic sales growth rate for the said quarter.

Figure 14. Investments from New Business Figure 15. Domestic Sales from New

Registrations in Caraga (in Million PhP) Business Registrations (in Million PhP)

Source: DTI Caraga Source: DTI Caraga

13

Surigaodel

Norte

Surigaodel Sur

Agusandel Sur

DinagatIslands

Agusandel

Norte

2018 122,963 66,160 54,585 35,450 15,108

2019 85,784 6,599 24,412

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

October November December

2018 102 114 124

2019 116 103 113

0

20

40

60

80

100

120

140

SERVICES SECTOR PERFORMANCE Tourist Arrivals Dropped The partial data shows that tourist arrivals in the region declined in the fourth quarter of 2019 compared to the same quarter in 2018. The said trend is true for all provinces. According to the Philippine Chamber for Commerce and Industry (PCCI), the sluggish growth in tourist arrivals could be attributed to the congestion in the Ninoy Aquino International Airport (NAIA), where most of the flights going to Caraga are coming from. Nonetheless, worth noting is the

month of October where the passengers per flight ratio increased due to the International Surfing Competition held in Siargao. To address the possible large influx of airline passengers during the Christmas season, 50 more flights were added starting November 2019. However, despite increasing the number of flights going to Bancasi Airport, the number of passengers per flight still decreased.

Figure 16. Tourist Arrivals in Caraga Figure 17. Passengers per Flight in Bancasi

Source: DOT Caraga Source: CAAP Butuan

14

PEACE AND SECURITY Crime Solution Efficiency Rate Declined The Crime Solution Efficiency (CSE) rate in the region, which is the percentage of solved cases out of the total number of crime incidents filed, dropped during the fourth quarter of 2019. Only 83 percent of the total reported crimes in the region during the last quarter of 2019 were solved

compared to the 85 percent recorded in 2018. The 9 percent drop in the CSE rates of Cabadbaran City and Tandag City influenced the region’s total CSE rate. Meanwhile, the CSE rates of Butuan City and Surigao del Sur improved by 3 percent and 4 percent, respectively.

Table 4. Crime Statistics in Caraga

LGU

PERIOD

Q4 2018 Q4 2019

CV CSE CCE CV CSE CCE

Bayugan City 137 78% 94% 133 76% 93%

Cabadbaran City

56 92% 100% 92 83% 93%

Surigao City 147 68% 87% 208 69% 86%

Tandag City 41 85% 97% 55 76% 89%

Butuan City 498 85% 92% 413 88% 95%

Agusan del Norte

290 90% 93% 359 91% 95%

Agusan del Sur

574 87% 93% 501 88% 92%

Surigao del Norte

356 86% 92% 472 84% 93%

Surigao del Sur

482 84% 92% 406 88% 92%

Dinagat Island

59 92% 97% 67 91% 94%

Caraga 2,640 85% 94% 2,218 83% 92%

Source: PNP Caraga

15

DEVELOPMENT PROSPECTS Agriculture Development

• Increase in the Caraga’s palm oil output due to the proposed initial development of a 50,000-hectare palm oil plantation in Northeastern Mindanao.3

• Completion and rehabilitation of fifteen (15) small-scale irrigation systems in different provinces in the Caraga Region that will directly benefit palay farmers.4

• Increased agricultural output in Agusan del Sur as a result of Department of Agrarian Reform’s (DAR) provision of PhP 17 Million worth of machineries and equipment to Agusan del Sur farmers.5

• Development for small farmers and

micro, small, and medium enterprises (MSMEs) due to the implementation of the USD 96 Million worth of Rural Agro- Enterprise Partnership for Inclusive Development and Growth projects, in cooperation with the International Fund for Agricultural Development.6

Infrastructure Development

• Implementation of a total of 207 infrastructure projects in the region amounting to PhP 19.7 Billion. This is a a result of the Department of Public Works and Highways’ (DPWH) undertaking of 57 of the infrastructure projects worth PhP 10.1 Billion across the region while the rest of the 150 projects totaling PhP 9.2 Billion will be distributed to

the nine engineering district offices in the region.7

3 Crismundo, M. (2020, January 8). 50,000-hectare palm oil plantation to be developed in Caraga region. Retrieved from

https://www.farmlandgrab.org/post/view/29398-50-000-hectare-palm-oil-plantation-to-be-developed-in-caraga-region.

4 Lopez, A. (2020, January 22). 15 diversion dams to further boost Caraga’s palay production. Retrieved from https://www.pna.gov.ph/articles/1091527. 5 Department of Agrarian Reform Agusan Del Sur. (2020, February 18). DAR turns-over P17-M worth of farm machineries to AgSur farmers. Retrieved from https://pia.gov.ph/news/articles/1034732. 6 Lopez, A. (2020, January 17). $96-M project seen to boost agri-based MSME growth in Caraga. Retrieved from https://www.pna.gov.ph/articles/1091172. 7 Lopez, A. (2020, January 8). Caraga to get P19.7-B infra projects: DPWH. Retrieved from https://www.pna.gov.ph/articles/1090300.