Area: 300,076 sq km (115,860 sq mi)
Population (1998 est.): 73,131,000
Capital: Quezon City (designated national government centre and the location of the lower house of the legislature and some ministries); many government offices are in Manila or suburbs
Head of state and government: Presidents Fidel V. Ramos and, from June 30, Joseph Estrada
Joseph Estrada (see BIOGRAPHIES) became president of the Philippines on June 30, 1998, with Gloria Macapagal-Arroyo as vice president. In elections on May 11 for a six-year term, Estrada won 40% of the vote, against 15.9% for his nearest rival, José de Venecia, who was backed by the retiring president, Fidel V. Ramos. Macapagal-Arroyo won 47% of the vote to defeat the vice presidential candidate on Estrada’s ticket. Estrada, who had been vice president under Ramos, assigned her responsibility for social welfare and development.
Estrada, a former star of B movies, campaigned on a law-and-order platform and said that fighting corruption would be a high priority. He charged that under Ramos 40% of the Philippines’ budget was lost through corruption. He gave his inaugural address in the national language, Pilipino, to emphasize ties to the common people in a nation run by an English-speaking elite. Many businessmen, fearing his populist appeals, worried that he would emphasize a redistribution of wealth rather than continue the economic reforms intended to raise production and living standards.
When Estrada seemed the likely winner, businessmen who had been accused of looting the country under former president Ferdinand Marcos started supporting and advising him. Chief among them was Eduardo Cojuangco, who had fled abroad when Marcos was overthrown in 1986 but returned to run, unsuccessfully, for president in 1992. With Estrada admitting limited knowledge of economics, the important role played by Marcos’s friends caused widespread apprehension. Ramos warned that the return of "Marcos cronies" would frighten off badly needed foreign investment.
Economic output held steady during 1998, as the Philippines was less affected by the general East Asian recession than were most other countries in the region. Exports rose, led by electronic equipment. Drought as a result of El Niño devastated crop production, causing a 7.2% slump in agricultural output in the first half of 1998. With agriculture employing 40% of the workforce and providing 20% of total national output, the drought hurt the entire economy. Despite popular expectations that Estrada would raise living standards, the president’s options were limited by a budget deficit. The government announced a 25% cut in all its spending. The International Monetary Fund said that the nation’s tax-collection system was "seriously flawed."
Estrada during the year sought to deal with a continuing insurgency in the southern Philippines. A Muslim group, the Moro Islamic Liberation Front, fought sporadic battles on Mindanao Island and adjacent islands for a separate Muslim state. The group had rejected previous presidents’ arrangements for more autonomy as inadequate, and its demands for independence remained unchanged under Estrada.
The Supreme Court on October 6 overturned a corruption conviction in 1993 of Marcos’s widow, Imelda. She had faced a possible 12 years in prison for fraud but never served any time.
One of the passenger ferryboats that provided the main link between the nation’s islands sank near Manila during the early morning hours of September 19. At least 43 people were killed. Typhoon Zeb killed 69 people and destroyed crops in mid-October. On December 3 a fire in an orphanage in Manila killed at least 30, most of them children.