Country Report Philippines February 2009

Outlook for 2009-10

• The president, Gloria Macapagal Arroyo, will remain in power until her term ends in 2010. Following the defeat of an impeachment complaint in November, the president should face no more attempts to impeach her.
• Despite persistent plotting against the president, she will retain the support of the army's senior commanders and a coup would not receive the necessary public backing for it to succeed.
• Ms Macapagal Arroyo will continue with constitutional reforms to replace the current presidential system of government with a parliamentary one. The opposition will see the reforms as a ruse by the president to remain in power.
• In 2009 the economy will contract for the first time in ten years, with real GDP down by 0.5%, as exports of goods and services decline by almost 8% owing to weaker global demand.
• Inflation will slow to an average of 1.4% in 2009 with country experiencing several months of deflation during the second half of the year. In 2010 inflation will average 3.6%.
• The current account will remain in surplus in 2009-10. The merchandise trade deficit will narrow in 2009 as imports fall faster than exports.

Monthly review

• Ms Macapagal Arroyo has appointed a former diplomat, Rafael Seguis, to chair a new panel aimed at agreeing a peace settlement with the country's largest insurgent group, the Moro Islamic Liberation Front.
• On January 8th the government raised US$1.5bn by selling ten-year bonds. According to officials, the government has now met its commercial external borrowing requirement for 2009.
• In late 2008 three international mining companies, Anglo American, NGM Resources and OceanaGold, abandoned plans to expand their investments in the Philippines.
• The rate of consumer price inflation fell for the fourth month in a row in December, with consumer prices up by 8% year on year, down from 9.9% in November. Core inflation fell to 7.3% in December.
• After weakening against the US dollar for most of 2008, the peso appreciated by 2.9% in December to end 2008 at PP47.49:US$1. However, this represented a depreciation of 12.8% from its year-earlier value.
• The downturn in the world economy has led to sharp year-on-year falls in merchandise trade. In November exports fell by 11.4% year on year. Meanwhile, imports were down by 31.5%—the sharpest fall since October 1985.

Source: Country Report

This report covers the following industry codes:
SIC Code: 10
NAICS Code: 212