Over 2006, financial analysts were positively optimistic about the Philippines. A Royal Bank of Scotland report in February declared, “We arrived in Manila cautiously bullish. We left Manila bullish.” In April, UBS Investment Research announced, “In the past months of marketing, we've picked up something … that we haven't seen in a very long time indeed: a palpable sense of interest and even excitement about the Philippines.” Also in April, Merrill Lynch reported,

In September, the same Merrill Lynch strategist wrote, “We expect a strong fiscal story this year, with a sharply reduced fiscal deficit. We maintain our overweight recommendation on the Philippines in our model portfolio.”

What are the sources of the analysts' optimism? Generally, as the quotes above make clear, they are the macroeconomic indicators that are the normal grist for financial analysts' mill. In 2006, the gross domestic product grew at a respectable rate of 5.4 per cent. The growth is attributed largely to good weather (that is, adequate rainfall), which boosted agricultural production, foreign investments in the electronics sector, the rise in exports in that sector, the expansion of call centres, and the increase in tourism. Merrill Lynch thinks that the GDP growth figure may even be understated, because it does not take sufficient account of the growth in services as well as of the large informal sector.

The analysts applaud the government's improved fiscal performance, which is partly due to the implementation of the expanded value added tax, despite doubts about the efficiency of the revenue collecting agencies.