A spate of positive external and internal assessments in late October upheld the growing and widespread belief that the economy is grounded on solid footings and is likely to be in the throes of becoming a Tiger economy in the current decade. The International Monetary Fund (IMF), World Bank (WB), and Asian Development Bank (ADB) have raised their forecast for the country's economic growth for 2012 with the best prognosis provided by the usually conservative ADB at 5.5%. Moody's, on the other hand, raised its credit rating for the country's foreign-denominated debt papers to a just a notch lower than investment grade, putting its evaluation at the same grade as those of Standard & Poor (S&P) and Fitch Ratings. Finally, the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) cut the policy rate by 25 basis points (bps) to 3.5%, a second record-low achieved in 2012.

Concretely, the economy appears to have recovered from the devastating floods in August, as evidenced by the slight uptick of electricity sales in September, albeit slower than expected as the destruction had been greater due to a reprise of the heavy rains and flooding in the later part of August. More rains came in September which negatively affected the service sector, but had positive impact on agriculture.

Eoin Treacy's view The Philippines is a clear example of where improving governance can have an outsized influence on economic performance. This has helped to spur investor interest in the latest Asian country to get its fiscal house in order.

The Philippine Composite Index has trended consistently higher since 2008. While it has lost momentum somewhat over the last few months, and is susceptible to a drawdown if the current widespread anxiety persists, a sustained move below 5000 would be required to begin to question the medium-term bullish outlook.

The US Dollar has been trending lower against the Peso since 2008, in a strong correlation with the stock market. This helps to demonstrate how influential foreign investor inflows are on the Philippine market. While the Dollar looks likely to unwind its short-term oversold condition, a sustained move above PHP 42.5 would be required to question the consistency of the medium-term downtrend.