``One of the strengths of the Philippine economy and society is the democratic system,'' Asian Development Bank (ADB) senior economist Shiladitya Chatterjee said, citing the smooth transition of presidential power from ex-general Fidel Ramos to former actor Joseph Estrada.

The hard-won political stability, the sweeping economic reforms launched by Ramos and prospects of a resurgence of foreign investments make experts upbeat about the country's future.

``We still feel that the Philippines will be able to weather the storm, perhaps earlier than most of its neighbours, and come back to rapid growth path,''Chatterjee told Reuters.

``One of the strengths of the Philippine economy and society is the democratic system... We are happy that the change to the new administration (took) place very smoothly and we are confident that whoever is in power will perform well and according to the needs of the people, which is what a democracy always requires.''

But the road to recovery for the country - which Singapore elder statesman Lee Kuan Yew once said should have more discipline and less democracy if it hoped to get anywhere - is strewn with landmines.

Inflation has risen to double digits, tens of thousands have lost their jobs owing to the currency turmoil and the El Nino dry spell, banks face mounting cases of bad loans and the Treasury is likely to end the year 40 billion pesos ($975 million) in the red.

The biggest worry is the impact of the prolonged regional financial crisis on the economy and the peso, whose value has fallen 36 per cent since last year.

The Philippines had loomed as Asia's mostpromising star until the currency turmoil dimmed its lights.

Bank of America currency research head Eric Nickerson said he remained relatively optimistic about the country.

``We're pretty bullish on the Philippines,'' Nickerson said, citing the fiscal discipline the country had shown which enabled it to exit from 30 years of International Monetary Fund tutelage.

``One of the strengths that the Philippines certainly does have is that political institutions are more matured than is the case in a lot of other countries,'' he said.

``On top of that, we've had a reasonably smooth transition...The labour market is competitive and we still see investment going into the Philippines while we do not see new investments going into places like Thailand and Indonesia,'' he said.

Rebuilt from the ruins of Ferdinand Marcos' dictatorship, the Philippine-style democracy boasts a pugnacious free press, a reform-oriented though noisy Congress and an activist Supreme Court that has served as a check to a powerfulpresidency.

It may be one of the world's most unruly democracies but government officials say the transparency and stable ground rules it offers are better than any authoritarian quick fix to its problems.

Currency crisis or not, gross national product posted a relatively high growth rate of 5.8 per cent last year.

A slide to 2.5 per cent is seen this year but officials expect GNP to hit 4.4 per cent growth in 1999 and five to six per cent growth by year 2000.

But no real development can come unless population growth, running at 2.4 per cent annually, is curbed, economists agree. Reducing poverty in a country where more than a third of the 70 million people is poor and where a 29-year communist insurgency is springing back to life is also a top concern, government officials say.

``Poverty always is likely to lead to social unrest,'' Chatterjee said. ``Growth cannot take place for a sustainable period of time unless you carry everyone along with you.'' Over half of the poor live in rural areas - onereason why the Estrada administration has vowed to modernise agriculture and the country's shabby infrastructure.

Estimates of funds needed to develop infrastructure projects range up to $8 billion annually, an ADB report said.

This makes it crucial for Estrada to deliver on his pledge to stamp out corruption.

The Philippines is estimated to have lost $48 billion due to corruption over the past 20 years, surpassing its entire current foreign debt of $45.6 billion.

``It is very important that you solve the corruption problem,'' said assistant director- general Ofelia Templo of the planning body National Economic Development Authority.

``We have looked at the policy side of things... What is needed now is action on the ground,'' Templo said.

``For as long as they (investors) feel the market conditions are OK... The banking sector is healthy and the political system is also stable, then I think we will see that we will stabilise sooner than most countries in the region.''

One source of concern iswhether Estrada, a college drop-out who won the presidency largely on his popularity as a movie star, can make the right decisions when the crunch comes.

``He may have many advisers but he will get all kinds of advice from them and that's what worries me,'' one economist said.

``It will be like him walking into a grocery store and seeing so many items on the shelves. What if he picks the wrong one? '' ``To that extent, yes, the man is important,'' Nickerson said. ``But there is the strength of political institutions in the element of democracy in the Philippines that is not the case in Korea or Indonesia or other places.''