Country Report Philippines November 2009

Summary

The president, Gloria Macapagal Arroyo, will remain in power until her term ends in June 2010; she is ineligible to stand in next May's presidential election.
Even if Ms Macapagal Arroyo were to succeed in amending the constitution so that the constraints on her remaining in power were removed, her deep unpopularity would mean that she would meet strong public resistance.
There is no clear front-runner for the presidential election, but two opposition figures, Manuel Villar and Benigno “Noynoy” Aquino, along with the choice of the administration, Gilberto Teodoro, are the most credible challengers.
The Economist Intelligence Unit expects economic growth to recover to an average annual rate of 4.4% in 2010-11, from an estimated 1.6% in 2009, as the global economy emerges from recession.
After widening to P280.6bn (US$6bn, or the equivalent of 3.7% of GDP) in 2009, we forecast that a recovery in economic growth and tax revenue will allow the budget deficit to narrow to 3.2% of GDP in 2010 and 2.3% in 2011.
Consumer price inflation will accelerate to an annual average of 4.4% in 2010-11 as international commodity prices rise from their 2009 lows.
The current-account surplus will widen slightly in 2010-11, owing to growth in remittances from overseas workers.

Four weeks after the capital, Manila, was hit by severe flooding, much of its eastern part was still under water, over 160,000 people were living in evacuation centres and parts of northern Luzon remained cut off.
A state of calamity is in place in Luzon, the island that was hit the hardest by two recent storms. This allows local governments in the area to draw on emergency funds and impose price controls.
On October 14th a former president, Joseph Estrada, announced that he will run for the presidency in next May's election.
The budget deficit reached P237.5bn (US$5bn) in the first nine months of 2009, close to the full-year target of P250bn. Unplanned spending after the flooding and the failure of an asset sale in October make an overrun inevitable.
A year-long downward trend in the year-on-year rate of consumer price inflation came to a halt in September, when it rose to 0.7%, from 0.1% in August.
The year-on-year decline in export earnings softened in August, to 21%, from 25.4% in July. On a month-on-month basis, exports have increased in every month since February, except for July.

Source: Country Report