| Gloria Arroyo |
The political battle over the past seven weeks initially sent share prices tumbling and undermined foreign investor confidence. It contributed to decisions by international credit rating agencies Fitch and Standard and Poor's to cut their Philippine debt-rating outlook - adding to the cost of international borrowing for the Philippines.
But this week saw a change in sentiment - at least for some investment analysts.
The Philippine Stock Exchange composite index climbed more than three percent in midweek trading, before a slight decline Friday as investors moved to the sidelines ahead of President Arroyo's Monday speech.
One of Mrs. Arroyo's supporters, former president Fidel Ramos, told VOA during a recent visit to Bangkok that the Philippines needs to "go back to basics" to restore confidence in politics and the economy. "For me it is the loss of investor confidence in the Philippines, it is the decline of our credit ratings, it is the depreciation of the peso, it's the lost opportunities coming out of perceptions about the Philippines, which do not allow us to attract more of the foreign direct investment which we deserve," he said.
Investors are hoping Mrs. Arroyo's speech will focus on political and economic reforms, and project an image of a leader paying close attention to the economy and domestic issues, rather than one struggling to hold onto power.
The opposition has said it will file an impeachment motion when Congress resumes next week, charging the president with vote rigging during last year's presidential elections.
The charges have led to some street demonstrations calling for Mrs. Arroyo to resign. The president denies wrongdoing, but has apologized for what she called bad judgement in speaking with an election official during the vote count.
Gilbert Lopez, a research analyst with Macquarie Securities in Manila, says investors are hoping that with the help of Monday's speech, Mrs. Arroyo can hold the support of enough members of Congress to stay in office. "Investors are betting that will be an avenue for President Arroyo to clear her name and prove once and for all she had no wrongdoing with regard to allegations of electoral fraud," he said.
Opposition Senator Panfilo Lacson, one of Mrs. Arroyo's electoral opponents last year, disagrees. He said Friday the economy was "in tatters," and he added fuel to rumors of coup plots by saying there was "widespread disenchantment" within the military.
Former president Ramos called for Filipinos to work together to ensure economic recovery. "We have been through worse crises before, and what is needed is for the greater unity, solidarity and teamwork of Philippine leaders, regardless of political persuasion and the people themselves," he said.
Mrs. Arroyo's finance secretary and other members of her economic team were among Cabinet members who resigned earlier this month and called for the president to step down. But analysts say the replacements - including incoming Finance Secretary Margarito Teves - are capable people.
The same analysts say Mrs. Arroyo has a chance of leading the Philippines to an economic recovery. Last year, she warned of a budgetary crisis unless taxes were raised, and Congress has since voted to raise the value added tax from 10 to 12 percent.
The opposition won an injunction stopping the government from implementing the higher tax pending a Supreme Court decision. But Mr. Teves, the incoming finance secretary, says he is confident the new tax could be in place by September.
Macquarie Bank's Mr. Lopez said there are already signs of improvement in the budget deficit. "The fiscal situation in the Philippines is actually getting better even without the VAT bill, yet we've seen improved revenue collections," he said.
Asian Development Bank senior economist Jesus Selippe also sees an improved outlook for the Philippines. The economy is forecast to grow between four and five percent this year, down slightly from last year but still better than earlier projected. "Things in my view are improving. Improving probably means not deteriorating, as many of us thought one month ago, whenever this crisis started. The way things go now - in my opinion - no major crisis is going to occur," he said.
Analysts believe if Mrs. Arroyo fends off impeachment efforts, and the Supreme Court lifts the VAT injunction, the confidence boost may trigger a cycle of investment and growth after so much uncertainty.