Excerpts from my Economic Analysis presentation in 2 strategic planning sessions conducted June 13 and June 28-29, 2010.

1. ECONOMIC BRIEFING
By Iggy S. Aquino, CIS

2. REGIONAL PERSPECTIVE:
Asia’s Economic Landscape
Economic Indicator 2009 2010 1Q 2010
Forecast
GROSS DOMESTIC PRODUCT
Developing Asia1 4.5% 6.6% n.a.
Malaysia -2.7% 6.0% 10.0%
Indonesia 4.5% 6.0% n.a.
Thailand -2.9% 6.0% 12.0%
Singapore -1.5% 7.0% 15.5%
China 8.4% 9.0% 11.9%
Philippines 0.9% 3.4% 7.3%
1/Source of the figures for Developing Asia: Asian Development Bank Special Note, December 2009
2/ Source of the rest of the data: Asian Economic Monitor by UBS, 5 January 2010
3/ Sourced from ABS-CBN News Website

3. PHILIPPINES: 1st quarter of 2010:
Best Quarterly Performance in 3 years
Source: National Statistical Coordination Board (NSCB)

4. PHILIPPINES: 1st quarter of 2010: INDUSTRIAL ORIGIN
Where did the growth come from?
SECTOR & SELECTED SUBSECTOR Q1 2009 Q1 2010
Agriculture, Forestry & Fishery 2.1% -2.5%
Sugarcane -3.5% -4.6%
Industry -26.0% 15.7%
Petroleum Products -29.0% 65.9%
Electrical Machinery -18.6% 54.9%
Services 2.8% 6.1%
Private Services 4.0% 9.5%
Affected by El Nino phenomenon. The sector employs about 38% of total
Philippine workforce.
Increased manufacturing activities due to global recovery
Boosted by broadcasting (31.4% growth) & BPO (11% growth)
Source: National Statistical Coordination Board

5. PHILIPPINES: PESO – DOLLAR
EXCHANGE RATE
 Peso to dollar at current P45-P46:$1 level
 Peso-Dollar level supported in recent years by
burgeoning OFW remittances, the BPO industry &
foreign equity investments.
 International reserves at a all-time high of $47.7
billion as of May 31, 2010.
 Peso could remain relatively stable vs. US dollar
due to sustained fund inflows
 Foreign investments could rise as incoming
administration perceived to be investor friendly

6. PHILIPPINES: INFLATION RATE
 Averaged 4.3% from January to April, 2010, higher
than 3.2% average of 2009. May, 2010 inflation
was stable at 4.2%.
 Increasing consumption and an improving
economy should push up 2010 inflation, although
slightly.
 Continuing economic growth in 2011 could be a
primary factor for projected rise in inflation

7. PHILIPPINES: INFLATION RATE
Historical 1998 – 1st Quarter 2010, average
Inflation Rate Increase due to spike in
fuel prices
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: National Statistical Coordination Board

8. PHILIPPINES: INTEREST RATES
 BSP reduced key interest rates in 2009 as part of
stimulus economic program
 May not yet exit program due to Eurozone debt crisis.
 91-day T-bills remain below 4% yield.
 Concern is ballooning fiscal deficit
 Budget deficit as of May, 2010 is already P131.6 billion
 Incoming administration may finance deficit thru debt
vs. additional taxes
 Increased government borrowings could push up interest
rates in 4Q 2010 and 2011.

9. PHILIPPINES: HISTORICAL INTEREST RATES
T-Bill 91 day & Treasury Bond 10 years Yields (1988-2010)
40.0
35.0
30.0
T-Bill 91 day
25.0
T-Bond 10 year
20.0
15.0
10.0
5.0
0.0
88
89
90
91
92
93
94
95
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
19
19
19
19
19
19
19
19
19
19
19
19
20
20
20
20
20
20
20
20
20
20
20
Source: National Statistical Coordination Board, with base data from BSP.

10. PHILIPPINES: ECONOMIC INDICATORS
Forecasted 2010 vs. Actual 2009
ECONOMIC INDICATOR 2009 2010 Forecast
Gross Domestic Product 0.9%1 5.9%-6.9%1
Inflation 3.2%3 4.5% average 2
Fiscal Deficit P298.5 billion4 3.5%
As percent of GDP2
OFW Remittances $17.34 billion2 6.0%
Increase vs. prev yr2
Peso Dollar Exchange Rate P47.63/$US12 P43.505
1/ From Development and Budget Coordinating Committee, NEDA as of June 10, 2010
2/ From Bangko Sentral ng Pilipinas
3/ From National Statistics Office
4/ From Bureau of Treasury
5/ Morgan Stanley forecast as of May 3, 2010