Compared to some countries such as Iceland, the Philippines so far has not encountered a crisis but the article points out some of the negative effects of the downturn on the economy. Naturally as president and being Arroyo she puts a somewhat positive spin on the situation in the Philippines. At the very least growth will be much slower next year.
Gloria: RP can weather storm but…
PRESIDENT Arroyo yesterday gave the assurance the country’s banking system is strong despite the exposure of some local commercial banks in the United States and the slowdown in the markets of other countries like Japan and Thailand.
"Our banks are well capitalized and the innate conservatism of our bankers is matched by the prudence of our regulators. Let us thank the banks," she said during the opening ceremony of the Agrilink-Foodlink-Aqualink at the World Trade Center.
The President, however, said the country should not be complacent and should continue to work on sustaining its economic gains as the financial crisis in the US "appears deeper than most anticipated."
She said that while the Philippines appears to be in a relatively good shape especially after posting a growth rate of more than 7 percent in 2007, "any slowdown or even recession in the US is not good for the global economy."
Sen. Mar Roxas called on President Arroyo to prepare the country from the onslaught of a "financial tsunami" by convening a multi-party budget summit to recast the proposed P1.4-trillion 2009 national budget to cushion the impact of the global financial crisis.
Roxas said Malacañang and leaders of Congress must sit down anew and give more funding to programs to ensure food security and protect the livelihood and jobs of Filipinos, millions of whom live in squalid poverty.
He said the new priorities in the recast budget should be programs to boost agricultural production to ensure food security, micro-lending programs to encourage Filipinos to go into business and boost domestic spending, quality education to improve the quality of local graduates, and strengthening of the domestic jobs market.
He said the tightening of credit lines as a result of the US financial crisis will result in slower consumer demand, which will mean less income for exporters and potential job losses for thousands.
"The tight credit situation abroad will definitely reach us. And if banks will stop lending to each other, it means credit will also tighten for Filipinos and interest rates will go up," Roxas said.
"Second, if the economies of the US, Europe, Japan and China weakens, our exports will go down and companies will need to lay off workers," he added.
Another negative impact of the financial crisis is a slowdown in dollar remittances from OFWs, which in recent years has been a consistent factor in stabilizing the economy, Roxas noted.
"We need to do everything now to put up a strong buffer against this financial tsunami," he said. – Jocelyn Montemayor