Country Report Philippines October 2009

Outlook for 2010-11

• The president, Gloria Macapagal Arroyo, will remain in power until her term ends in June 2010. She is ineligible to stand in next year's presidential election.
• 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.
• There is no clear front-runner for the presidential election, but two opposition figures, Manuel Villar and Benigno ???Noynoy??? Aquino, along with the administration's choice, 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 1.5% in 2009, as the global economy emerges from recession.
• We estimate that the budget deficit will widen to P283.6bn (US$5.9bn), equivalent to 3.7% of GDP, in 2009. A recovery in economic growth and tax revenue will allow the deficit to narrow in 2010-11.
• Year-on-year inflation will accelerate to an average of 4% in 2010-11 as international commodity prices rise from their 2009 lows.
• The current-account surplus will narrow in 2010-11 as prices for food and fuel imports rise. However, strong remittances from overseas workers will keep the current account firmly in surplus.

Monthly review

• The death on August 1st of a former president, Corazon Aquino, and the public response to it have catapulted a new contender??