Country Economic Review: Philippines

Abstract

During the latter part of 2004, several developments buoyed the economic outlook for Philippines. Continuing to be surprisingly resilient, economic growth for the first 9 months was 6.5%, higher than expected and likely to result in full-year growth in excess of projections. The services sector contributes most on the supply side, while the demand-side is led by personal consumption expenditure, assisted by strong inflows of remittances from the almost one-in-ten Filipinos working abroad. In the power sector, National Power Corporation recorded its first major asset sale, while the Energy Regulatory Commissions decision to allow a provisional increase in the wholesale electricity price gives better cost-recovery. Land Banks sale of a significant portion of its non-performing loans marks a possible break-through in achieving more rapid market-based resolution of the bad debt problem of commercial banks. The business community strongly welcomed the Supreme Courts December decision that confirmed the constitutionality of the Mining Act (1995), opening the way for investment revival in the sector.