But a turnaround is several years off, and more hardship is expected. Meanwhile, the government is intent on downsizing the bureaucracy. It has plans to lay off or relocate 200,000 federal employees. Despite the gloom, certain sectors, such as engineering and computer software, should benefit from state incentives and lower import duties. But the property sector is slowing, with banks becoming more prudent about real estate lending.
Manila says the deficit is due to capital-goods imports for industry.
But manufacturing growth has slackened for the third straight year. So has industrial consumption of electricity. But if exports are to grow, Manila may have to allow the peso to trade more freely, as well as cushion local industries from deregulation measures. Presidential polls next year may cause investors to put off business decisions. Electronics, chemicals and finance companies should be the biggest gainers.