“PNoy economic team looks at how US debt crisis will impact PHILIPPINE ECONOMY”President Aquino’s economic team studied the possible impact of the United States debt problem on the Philippine economy. The President wanted to know the possible effects of the US debt crisis and expressed concern about the rising peso and its impact on exporters.
“A lower dollar means that we pay less in terms of our foreign debt. If we were paying P42 to one dollar and the exchange goes down to, say, 40 then we’re actually saving P2 per dollar," he said.
The negative effect, on the other hand, is that Filipino workers in North America may think twice before sending money to the Philippines. If the economy of US weakens and the dollars goes down, the result is that our fellow citizens who reside at North America will be careful. Meaning, they will remit, they could remit less or if they don’t remit less, what they remit will be worth also less. So it will have an impact on consumption.LYN
“Exporters not threatened by US crisis but fear impact on other markets”
It was stated that CEBU, Philippines - The Philippine export industry is not threatened by another economic crisis faced by the United States, unless the financial instability will spread to other major markets such as Europe, China, and Japan.
PhilExport president and chief executive officer (CEO) Sergio Ortiz-Luiz Jr. said that after the recession, the Philippine exports have developed strong connection with other major markets; in fact latest figure showed that the country’s exports to US went down from 34 percent to 12 percent. Surprisingly, Japan is now the number one export market of the Philippines, followed by US and China.
In the year-on-year comparison that Philippine export sector only grew by three percent, a slight shortage of the industry’s projection of growing 10 percent this year. Nevertheless, Ortiz-Luiz said the sector is not downgrading its target of growing 10 percent this year, as the projection in the next few months is seen to be promising.
The PhilExport head said that aside from China, Japan, and Europe, the Philippine export is also getting its confidence from the growing market in Asia. Moreover, the Philippines is now growing its business within the Asian market, and this may offset the decline of orders coming from the US.
Last year, because exporters considered it as “recovery year”, the industry grew by 25 percent, and exceeded the target of 20 percent growth set by the industry players in 2010. Despite the slow pace of growth seen in the first six months this year, Ortiz-Luiz is confident that the 10 percent target growth is achievable, if the positive trend will continue. LYN
“NEDA sees no reasons to be alarmed with US crisis, downplays critics”
“With regards to the impact to the Philippine economy of the US credit rating downgrade , NEDA estimates that it will be minimal, around .11% of the GDP (gross domestic products). And that is too small,”
- Ruperto Majuca(NEDA Assistant Director General)
The National Economic and Development Authority (NEDA) sees no enough reason to be alarmed despite the prevailing economic crisis in Western countries, particularly the United States. NEDA Assistant Director General Ruperto Majuca reiterated the government’s stand amidst continuous speculations that the US’ downgrade and economic crisis will greatly affect the local economy.
However, Majuca said that the government must do necessary measures “to calm the market so that the indirect effects will not happen”, also referring to future effects of the crisis.
Lower exports in trade channels, slower flows in remittance channel as well as in foreign direct investments are among the most likely effects of the US credit downgrade to the Philippines. But he noted that the people should not be alarmed with these.
“Our people should not be alarmed because this (US crisis) has only small effects. The (US) economy has already experienced the slow down before, and there we’re just additional points on the slow down today. So, it would just possibly hit through the trade channel and the remittance channel,” Majuca said during the media briefing.
Among other economic issues, which confronted the Philippine economy this year included the slowdown of the economies of US and other European countries, political turmoil in the Middle East countries, and supply-chain destruction brought by disasters in countries like Japan.
However, Majuca emphasized that despite of all the recent events affecting the local market, the economy showed remarkable resiliency.
“The 2011 1st quarter was buffeted by so many shocks… but despite of all these things, with the many shocks, the economy shows remarkable resiliency…. We can expect brighter numbers, rosier numbers for Q3 and Q4,” he ended. CHA
“PESO is strengthening despite the US Crisis”
The Philippine peso on Monday closed at a three-year high at 41. 925 pesos against U.S. dollar, its strongest finish since April 30, 2008 when it closed at 42.17 pesos against U.S. dollar.
The Philippine Stock Exchange (PSE) also hit a new all-time high of 4,550.53, surpassing the previous peak hit on July 20.
Finance Secretary Cesar Purisima said in an interview that the Philippines is glad that the unthinkable did not happen. "We are breathing a sigh of relief that they (U.S.) had finally resolved it."
According to Governor Amando Tetangco of the Bangko Sentral ng Pilipinas (BSP), the country's central bank, while there is no guarantee that the United States would not lose its triple-A rating, the Philippine economy would be able to sustain its growth although "the loss of its (U.S.) credit rating would temporarily heighten local market volatility."
International financial institutions have forecast the Philippine economy to grow by 5-6 percent this year. The Philippine government, however, said that it is aiming for a 7-8 percent growth in 2011.
Tetangco said that the peso would continue to strengthen as foreign investors would opt to keep flocking to emerging economies like the Philippines as the United States and some industrialized countries in Europe are plagued by worsening debt problems.
He also assured the public that the domestic banking sector is prepared to weather any short-term shocks in the financial market, adding that while a downgrade would undermine the assets of banks, particularly those that hold U.S. debts, local banks remained “well capitalized."
The Philippines' GIR, considered healthy under international standards, was beefed up by remittances and foreign investments in business process outsourcing and portfolio instruments. CHA
“Value of investments in this country will not change despite the US Crisis”
The U.S economy is experiencing financial crisis since 2008 which can be evidenced by the decline of its rate profit and the downgraded of its credit rating from AAA to AA+ by the Credit Rating Agency Standard and Poor’s. According to Former Secretary of State Otto Reich, U.S debt crisis have indescribable global economic consequences since United States produces and consumes almost a quarter of all products sold globally and if this crisis continues, its global effects could deepen. It can lead to a recession, higher interest rate and higher rate of unemployment.
In the Philippines, President Aquino declared that the weakening economy of U.S will not have a negative impact on the Philippines Investment Sector. “The value of investments in this country will not change with what is transpiring in America and if foreign investors continues to see it profitable to continue doing business in the Philippines, then they will remain in the Philippines” he said.
In contrast to what President Aquino has said, “the US’ debt crisis will inevitably affect the economy of the Philippines and the outlook is not good” Bayan secretary general Renato Reyes Jr. said. According to him, Aquino administration should change and reverse some of the economic policies that make Philippine economic growth dependent on US investments.
On the other hand, the Philippine export industry is not threatened by the crisis faced by US but since its economy is large enough to affect other countries like China, Japan and Europe, they must continue monitoring the impact of US Crisis. JAM
“US Crisis will cause low remittances of OFWs”
OFWs are the major contributors to the country's economy. The largest number of OFWs can be found in the United States, United Kingdom and Middle East. Remittances from these overseas workers help drive the Philippine economy and account for at least 10% of the country's GDP.
However, with the US recession bringing down the global economy, the jobs of overseas Filipino workers have also become at risk resulting to a decrease in remittances. Low remittances had caused the families of some OFWs to suffer because of less money they receive. There was also less help for economic growth and aid to sustain the development of the country. Another effect of US crisis is the decline in exports as a result of weak demand in the US and other parts of the world. AMA
No comments:
Post a Comment