Country Report Philippines September 2009

Outlook for 2009-10

• 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.
• The Economist Intelligence Unit expects economic growth to slow from 3.8% in 2008 to 1.5% in 2009, owing to a contraction in exports and investment.
• The budget deficit will widen to P278.1bn (US$5.7bn) in 2009, equivalent to 3.6% of GDP, mainly as a result of falling tax revenue owing to the economic downturn.
• Inflation will slow to an average of 2.9% in 2009, owing to weaker domestic demand and lower international commodity prices.
• The current-account surplus will widen to 4.4% of GDP this year, as a result of lower prices for commodity imports, which will lead to a narrowing of the merchandise trade deficit.

Monthly review

• Ms Macapagal Arroyo has delivered the last state of the nation address of her presidency. The speech focused on the achievements of her term and included a request to Congress (the legislature) to pass outstanding legislation.
• The government and the country's main rebel group, the Moro Islamic Liberation Front, have agreed to resume peace negotiations aimed at ending a decades-old conflict on the southern island of Mindanao.
• The government has revised its budget for 2010, and now expects a deficit of P233bn, equivalent to 2.8% of GDP, based on the official growth forecast. It had previously expected a shortfall of P208bn.
• The Bangko Sentral ng Pilipinas (the central bank) left interest rates on hold at its monthly meeting on August 20th. It had cut overnight borrowing and lending rates by 25 basis points at each of its previous four meetings.
• The economy strengthened in the second quarter, with real GDP expanding by 1.5% year on year, up from the previous quarter's revised expansion of 0.6%, according to the National Statistical Coordination Board.
• Merchandise exports fell by 24.8% year on year in June, according to the National Statistics Office. However, on a month-on-month basis exports rose by 10.3%, suggesting that the contraction in trade may have bottomed out.

Source: Country Report

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