Country Report Philippines June 2009

Outlook for 2009-10

• The president, Gloria Macapagal Arroyo, will remain in power until her term ends in June 2010. Following the defeat of an impeachment complaint in November 2008, the president should face no more attempts to impeach her.
• Despite persistent plotting against the president, she will retain the loyalty of the army's senior commanders, and a military coup would not receive the popular support that it would require to succeed.
• Ms Macapagal Arroyo will continue with constitutional reforms to replace the presidential system of government with a parliamentary one. The opposition will view such changes as a ruse by the president to hold on to power.
• The Economist Intelligence Unit expects the economy to shrink by 1.8% in 2009, owing to a large contraction in exports and investment. Remittance inflows are also likely to fall.
• The budget deficit will widen to P226.2bn (US$4.8bn), or 2.9% of GDP, in 2009 as a result of falling tax revenue owing to the economic downturn.
• The current-account surplus will expand this year, to 2.7% of GDP, owing to lower prices for commodity imports, which will lead to a narrowing of the merchandise trade deficit.

Monthly review

• Members of the pro-administration coalition in the House of Representatives (the lower house of Congress) are pressing ahead with proposals to amend the 1987 constitution.
• Candidates are emerging for the next presidential election, to be held in May2010. On the administration side the most popular candidates are the vice-president, Noli de Castro, and the defence secretary, Gilberto Teodoro.
• In January-April 2009 tax revenue was down by 6.5% year on year, to P310.3bn. As a result, the budget deficit was four times bigger than in the year-earlier period, at P111.8bn.
• In an attempt to raise revenue, the Department of Finance aims to part-privatise the exploration arm of the Philippine National Oil Company and to auction off real estate belonging to another state-owned firm, Food Terminals.
• In April consumer prices rose by 4.8% year on year. This represented a fall from the previous month's increase of 6.4%, and was the lowest rate of inflation since December 2007.
• The contraction in merchandise exports has slowed, with exports down by 30.9% year on year in March, a slightly better result than the declines of 42% in January and 39.1% in February.

SOURCE: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52