Presidential aides called a special press conference for Mrs Arroyo to defend her record after official statistics showed half a million Filipinos lost their jobs in the 12 months to July, swelling the ranks of the unemployed to 4.35 million.

Labour Secretary Patricia SantoTomas said 760,000 of the unemployed were in the agriculture, fishing and forestry sectors, which were hurt by unfavourable weather.

Mrs Arroyo said the farmers had suffered in particular from droughts brought on by the El Nino effect this year.

'I am confident that more jobs have been restored in the agricultural sector as the El Nino has abated,' she said.

But she admitted political instability, including an attempted coup in July, had contributed to the country's economic weakness was a deterrent to new projects.

'We have to shake off the syndrome of destabilisation and excessive politicking to get investments on track,' she said.

Deputy presidential spokesman Ricardo Saludo sought to put a positive spin on the economy by saying the government was doing its part to provide stimulus, with last month's start of a 24 billion peso (HK$3.4 billion) injection into rural development projects.

Economic planning secretary Romulo Neri said gross deomestic product (GDP) growth could still hit the full-year forecast of 4.2 per cent. GDP growth had slowed to 3.2 per cent in the second quarter, from 4.5 per cent in the first three months of the year.

The Philippines' GDP figures may be helped by a global economic rebound following the adverse effects of Sars and the war on Iraq.

However, two other surveys added to the gloom and increased the pressure on Mrs Arroyo, a former economics professor who had been expected to fix the financial mess left by her predecessor.

Private research firm Pulse Asia said a survey had found that nearly one out of every four adult Filipinos - or about 10 million - wanted to emigrate.

And, in a survey commissioned by BusinessWorld newspaper, New York-based consultancy Roper ASW Asia Pacific found business confidence in Manila had fallen to its lowest this month since June 2001 - a month after Estrada's supporters had attempted to storm the presidential palace in a bid to restore him to power.

Manila's top businessmen felt the economy was in bad shape and prospects would worsen in the next six months, the poll found. Many intended to further cut jobs and investment.

Mrs Arroyo is expected to run in a presidential election next year, going back on an earlier pledge not to. Amado Mendoza, a political economist from the University of the Philippines, warned that his former colleague would struggle on the economic front because of the political baggage of not having been voted into the presidency. Mrs Arroyo was Estrada's vice-president and took his job after he was deposed by a popular uprising.

'Unfortunately these non-economic factors are very real and are the single most important obstacles to sustaining economic growth,' Professor Mendoza said.

'We have made significant strides in the economic reform front but not made equally substantial advances in the political front, where the quality of our institutions have declined.'

Central Bank governor Rafael Buenaventura said the economy could be growing at 7 per cent except for 'non-economic factors'.