The Philippine Economy Facing Challenges in Global Crisis
The global economic slowdown does not spare more stable economies such as Iceland, Ireland, UK, Germany, and the rest of giant European national economies. Can the Philippine government face the financial challenges of our time? How the US economy will directly affect the Philippine economy? As the country is feeling the effect of the global financial crisis, the Filipino citizens are encouraged not to lose heart, but work and pray harder in hurdling the challenges of our time.
How to Survive the Financial Crisis
Tips on Beating Economic Crisis
The field of Finance is closely related to economics and accounting, and financial managers need to understand the relationships between these fields. Economics provides a structure of decision making in such areas as risk analysis, pricing theory through supply and demand relationships, comparative return analysis, and many other important areas. Economics also provides the broad picture of the economic environment in which corporations must continually make decisions.
Fetching RSS feed... please stand byGlobal Financial Crisis and the Philippine Economy
Is the Philippine Economy Ready to Battle the Global Financial Hardship?
Our editorial point-guard in the Philippines, the Bohol Chronicle, gave us a blow-by-blow coverage of the financial impact of the global credit crunch on the Philippine trade and business.
As we write, complete intellectual clarity still eludes the real character of the Bailout Plan that is supposed to free the world from The Great Depression II. That is the reason why the recovery of the global market has been slow and painful. lingering long enough, the crisis can seep into the Philippine economy.
If the market economy in the USA freezes, exports of the Philippines would be certainly affected. Even if our exports to America is already half of what it was in 2000, our other trading partners are dependent on the USA. Our exports therefore will also be affected, alas and alack.
With companies down in America, mass lay offs can occur. Without jobs or lower pay, Americans cannot afford maids and caregivers. With business down, the outsourcing job which translates into "call centers" opportunities in the country can spiral down (except the medical transcriptionists).
With business activity globally cut to size, there will be less cargo and people transfer - affecting the demand and even the demand for seamen - which the Philippines is the second largest country - supplier of. Definitely, tourism, a US$3-billion industry in the country could slacken - because R and R (rest and recreation) are the most postponable items in hard times.
With that - the OFW remittances could be whittled down and the prospects of landing 1 million new overseas jobs per year for RP could become a thing of the past.
Investments would be slow in coming - as most countries will be nursing their own economies to even bother investing abroad.
Multilateral institutions like the IMF and the World Bank would be dividing its aid and grants to many more beleaguered nations, making RP fight for a smaller share.
Investments of Filipinos in real estate in America and corporations investing in stocks in America could find their market values eaten by the bearish perspective of a nervous market. With production costs up and credit scarce, the prices of food and other imported materials can shoot through the roof.
Interest rates world-wide might go higher due to more threatening global risks, making the cost of borrowing for the Philippines more expensive.
The Central Bank of the Philippines recently borrowed close to US$1 billion recently to bolster its US$38-billion international reserves for contingency reasons.
But we could be one of the few cock-eyed optimists who think that the massive intervention of all nations into the global malady - could solve the problem over the medium-term (several months hereafter). It is because we believe that policy-makers now have the 20-20 vision of hindsight to see what moves and does not move in bailout situations.
The unanimity of purpose - as if the World is waging war versus one enemy - is one ground for our optimism. The G-7 countries, (USA, Japan, Canada, Italy, Britain, England and France) now speak with one voice on the crisis. The IMF and World Bank
will spare no effort in stopping the global collapse from happening in their lifetimes.
With our banking background, the US$700-billion Rescue Plan looks to us now more "total and comprehensive." Whereas before, it was merely to buy toxic assets of the banks - to build new market confidence - that was just addressing one side of the balance sheet - the left side.
Now there are talks - even globally - about nations' central banks guaranteeing all deposits and, buying bank stock shares or recapitalizing the equity of weak banks - both on the right side of the balance sheet. That should leave no room for doubt - at least theoretically - that the workout plan will fly. Only man's confidence - which is subjective - can subvert that plan. The fearful mankind will only serve to fulfill its own worst prophecy.
The successful bailout plan will allow the financial system to work. It is important because the world goes round because of credit. Without confidence, there is no credit - without credit, there is no commerce. The market will freeze and die. And so will the rest of mankind.
Could you imagine man doing business merely on cash - and those with no cash will barter vegetables for electric bulbs and so forth?
We will go back to the times none of us saw or imagined - the Dark Ages or Terra Incognita as Time magazine puts it - and where the rule of the Cavemen was to fight and let the fittest survive.
As we write, complete intellectual clarity still eludes the real character of the Bailout Plan that is supposed to free the world from The Great Depression II. That is the reason why the recovery of the global market has been slow and painful. lingering long enough, the crisis can seep into the Philippine economy.
If the market economy in the USA freezes, exports of the Philippines would be certainly affected. Even if our exports to America is already half of what it was in 2000, our other trading partners are dependent on the USA. Our exports therefore will also be affected, alas and alack.
With companies down in America, mass lay offs can occur. Without jobs or lower pay, Americans cannot afford maids and caregivers. With business down, the outsourcing job which translates into "call centers" opportunities in the country can spiral down (except the medical transcriptionists).
With business activity globally cut to size, there will be less cargo and people transfer - affecting the demand and even the demand for seamen - which the Philippines is the second largest country - supplier of. Definitely, tourism, a US$3-billion industry in the country could slacken - because R and R (rest and recreation) are the most postponable items in hard times.
With that - the OFW remittances could be whittled down and the prospects of landing 1 million new overseas jobs per year for RP could become a thing of the past.
Investments would be slow in coming - as most countries will be nursing their own economies to even bother investing abroad.
Multilateral institutions like the IMF and the World Bank would be dividing its aid and grants to many more beleaguered nations, making RP fight for a smaller share.
Investments of Filipinos in real estate in America and corporations investing in stocks in America could find their market values eaten by the bearish perspective of a nervous market. With production costs up and credit scarce, the prices of food and other imported materials can shoot through the roof.
Interest rates world-wide might go higher due to more threatening global risks, making the cost of borrowing for the Philippines more expensive.
The Central Bank of the Philippines recently borrowed close to US$1 billion recently to bolster its US$38-billion international reserves for contingency reasons.
But we could be one of the few cock-eyed optimists who think that the massive intervention of all nations into the global malady - could solve the problem over the medium-term (several months hereafter). It is because we believe that policy-makers now have the 20-20 vision of hindsight to see what moves and does not move in bailout situations.
The unanimity of purpose - as if the World is waging war versus one enemy - is one ground for our optimism. The G-7 countries, (USA, Japan, Canada, Italy, Britain, England and France) now speak with one voice on the crisis. The IMF and World Bank
will spare no effort in stopping the global collapse from happening in their lifetimes.
With our banking background, the US$700-billion Rescue Plan looks to us now more "total and comprehensive." Whereas before, it was merely to buy toxic assets of the banks - to build new market confidence - that was just addressing one side of the balance sheet - the left side.
Now there are talks - even globally - about nations' central banks guaranteeing all deposits and, buying bank stock shares or recapitalizing the equity of weak banks - both on the right side of the balance sheet. That should leave no room for doubt - at least theoretically - that the workout plan will fly. Only man's confidence - which is subjective - can subvert that plan. The fearful mankind will only serve to fulfill its own worst prophecy.
The successful bailout plan will allow the financial system to work. It is important because the world goes round because of credit. Without confidence, there is no credit - without credit, there is no commerce. The market will freeze and die. And so will the rest of mankind.
Could you imagine man doing business merely on cash - and those with no cash will barter vegetables for electric bulbs and so forth?
We will go back to the times none of us saw or imagined - the Dark Ages or Terra Incognita as Time magazine puts it - and where the rule of the Cavemen was to fight and let the fittest survive.
Philippine News Update
Monitoring the events and happenings of the Philippine Islands
As the citizens of our country scatter all across the globe, we strive to provide the latest news and information on the Philippine economy, including business and financial news.
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