Country Report Philippines May 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 coup d'etat 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 remain in power.
• The Economist Intelligence Unit expects the economy to shrink by 1.9% in 2009, owing to a large contraction in exports and investment. Remittance inflows are also likely to fall.
• The budget deficit will widen to P211bn (US$4.2bn), or 2.8% of GDP, in 2009 as a result of low tax revenue resulting from the economic downturn.
• The trade deficit is expected to narrow as a result of lower prices for commodity imports in 2009, but reduced remittance inflows will cause the current-account surplus to fall this year.

Monthly review

• Two resolutions that could pave the way for another six years in office for the president are due to be introduced in the House of Representatives (the lower house of Congress) during the current session (mid-April to early June).
• The budget deficit in the first quarter of 2009 was larger than the target of P110.1bn, at P119.7bn, as levels of tax collection by the Bureau of Internal Revenue and the Bureau of Customs fell well below target.
• On April 16th the government once more adjusted its forecast for the fiscal deficit this year, to P199.2bn, from P177.3bn previously. The revision reflected a new forecast for GDP growth in 2009 of 3.1-4.1%, down from 3.7-4.4% earlier.
• After a small blip in February, the headline year-on-year rate of consumer price inflation resumed its downward path in March, falling from 7.3% in the preceding month to 6.4%.
• According to the Department of Labour and Employment, between the end of September 2008 and the end of March 2009, 11,574 domestic jobs were lost, while 6,406 overseas Filipino workers were displaced.
• Preliminary balance-of-payments statistics for 2008 from the Bangko Sentral ng Pilipinas (the central bank) show that the balances on both the current and capital accounts deteriorated last year.

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

• Highlights
• Outlook for 2009-10: Domestic politics
• Outlook for 2009-10: International relations
• Outlook for 2009-10: Policy trends
• Outlook for 2009-10: Fiscal policy
• Outlook for 2009-10: Monetary policy
• Outlook for 2009-10: International assumptions
• Outlook for 2009-10: Economic growth
• Outlook for 2009-10: Inflation
• Outlook for 2009-10: Exchange rates
• Outlook for 2009-10: External sector
• Outlook for 2009-10: Forecast summary
• The political scene: Constitutional change is debated again
• Economic policy: Lower tax income pushes the budget deficit above target
• Economic policy: The 2009 deficit forecast is increased yet again
• Economic policy: A conservative cut is made to central bank interest rates
• Economic performance: Inflation slows across the board
• Economic performance: Jobs are lost at home and abroad
• Economic performance: Weak external conditions hit exports and remittances
• Economic performance: The global slump is eroding the payments surplus
• Data and charts: Annual data and forecast
• Data and charts: Quarterly data
• Data and charts: Monthly data
• Data and charts: Annual trends charts
• Data and charts: Monthly trends charts
• Data and charts: Comparative economic indicators
• Basic data
• Political structure