In January 2001 President Joseph Estrada relinquished power following months of protests. Estrada was subsequently charged with plundering the economy for his own benefit - a crime punishable by death. Estrada's successor, Gloria Arroyo, faces a number of challenges. The economy is making a sluggish recovery from the Asian financial crisis of 1997, with growth rates in the Philippines lagging behind those of regional competitors. Mrs Arroyo wants to inject more investment by pushing through privatisation and deregulation, especially in agriculture and the power-generating industry.
Political stability is another major concern.
A separatist conflict on Mindanao has claimed more than 120,000 lives in three decades. But Muslim rebels there have now agreed to a ceasefire and negotiations. Other Muslim separatists, the Abu Sayyaf group on Jolo, are proving less amenable. The group has a history of violence towards hostages, and Mrs Arroyo has declared all-out war on the rebels. Gloria Macapagal Arroyo Arroyo was elected vice-president in 1998.