MANILA, Philippines - With beautiful holiday decorations and a festive atmosphere this Christmas season, one may think that an economic crisis did not hit the Philippines this year.

A number of economists believe that this general optimism reflects a resurgence of consumer confidence in the country, months after the economic slowdown hammered the Philippines in the earlier part of the year.

But according to University of the Philippines economics professor Benjamin Diokno, this so-called recovery may only be a temporary high.

"Hindi pa tayo babalik sa recovery (We won't be recovering yet)," he said.

For one, Diokno said the government still has to contend with the ballooning budget deficit, which is expected to hover around the P300-billion peso level until next year.

As a result, the government would be forced to borrow more from foreign banks. To date, the government's foreign debt is already at $53 billion dollars, data from the central bank showed.

Mixed views

The Philippines is expected to generate more jobs next year as the election season nears. Candidates and their supporters usually hire more people to help them in their respective campaigns.

But since these jobs will no longer be needed once the campaign period is over, Diokno said Filipinos will still have a hard time looking for more permanent jobs next year. This as businessmen opt to be in a wait-and-see mode until the results of the 2010 polls come out.

Despite this, stock market analyst Astro del Castillo said there are still many signs that the economy is improving relative to other countries hit hard by the global recession.

For one, he said the Philippine Stock Exchange index (PSEi) recorded a 63% growth this year, the largest annual index growth since 1994 when the bourse first operated as a merged entity.

The PSEi advanced by 1,179.83 points to end at 3,052.68 as of December 29, the bourse's last trading day for the year.

Del Castillo's positive sentiment was echoed by IGC Securities President Ismael Cruz, who said that the bull run will continue next year. "We're seeing the market challenge its all-time high," he said in an interview at ANC.

But even with this development, economists urged the next administration to carefully map out its strategies to ensure a sustained recovery for the Philippines in the years to come.