Country Economic Review: Philippines

Abstract

During the past 18 months macroeconomic performance has been relatively sound, despite an unfavorable external environment and domestic uncertainties. Negative market sentiment was reversed by the end of 2001, with the Government’s commitment to fiscal discipline the pivotal achievement. Early results for 2002 indicate scope to build on the success of 2001, but confirm the systemic budget problems. To consolidate hard-won gains, the administration is addressing the challenges associated with: fiscal consolidation, banking sector weakness, incentives for private investment, and governance. For poverty reduction, higher growth and focused efforts offer the best chance to recover gains eroded since 1997.