Oscar for Most Prepared Country
It’s Oscar season, and the award for Most Prepared Country for the Global Meltdown goes to…the Philippines!
Fall of Empire
The Global Economic Meltdown has undermined once-powerful economies, illustrated by US woes: 2.8% GDP growth decrease by Q4, 2008, contracting 1.5% more in Q1, 2009; 7.2% unemployment rate, with 2.6 million lost jobs which Obama seeks to replace via infrastructure-oriented stimulus spending.
The US recession worsens despite remedial actions. GDP shrinkage continues as companies face less revenue from American consumers. Bailouts, like the $700-billion Troubled Assets Relief Program, and Obama's $819 billion package failed to restore consumer confidence. Distributed as tax rebates, households saved two-thirds and used the remaining to pay off credit cards.
The Fed faces a blank wall. Bernanke, in stimulating lending, dropped key interest rates to 0-0.25%. Yet loans - and spending - languish as recession-borne layoffs and belt-tightening induces a deflationary spiral.
Middle Kingdoms Rising
The Philippines’ core competencies protect her economy, by steadily growing her Gross International Reserves (GIR) which rose to $36.7 billion in September 2008 (up 8.7% from December 2007), equivalent to 5.8 months import cover (i.e. payment for imports).
Filipino Expat remittances reached $17 billion in 2008, projected at $17.6 billion in 2009. The BPO Industry earned about $7 billion in 2008, projecting $9.5 billion in 2009. Tourism earned $4.8 billion in 2007, and expects 10% growth through 2010.
Standing Tall against Giants
The Filipino Expat continually increases remittances, responding to bad times at home, hitting $1.4 billion in October 2008, the second-highest monthly inflow since 1989. Despite the crisis, “non-traditional” labor markets (e.g., EU) hiring increased 27%.
BPOs serving Financial Institutions will lose business (as their clients downsize), however offset by growth in Sales-oriented clients, who will increase selling activity to generate revenues. Developments like a Philippine outsourcing company partnering with Google Inc., creating 1,000 jobs, indicate available work for BPO employees displaced by parent firm closures.
January-October 2008 tourist arrivals increased 4% from last year, despite the crisis. Many came from China and Russia (as I proposed last May 19).
Added Protection
Other factors bolster our preparedness. Our Taipans, too small to invest in large economies’ offers, were spared the fate of investors in Madoff, or Citibank. Philippine banks’ non-performing loan (NPL) ratio stood at 3.98% (July 2008); indicating freedom from toxic loans and assets.
Our renewable energy projects are attracting Foreign Direct Investments (FDI) of $850 million (2008), saving about $2.9 billion in fuel importations. Our cheap medicines bill offer equivalent medicines that onerous Pharmaceuticals do, but immensely cheaper; diluting their 70% stranglehold on a $1.9 billion market, saving the poor money – and lives.
With the positive financial reengineering of an economic team led by no less than our Economist - President Arroyo, National Treasurer, Roberto Tan has finally tamed the monstrous debt ravaging the economy since the Aquino administration, swapping medium term loans (5-7 years) for longer terms (10-25 years). The weighted average maturity for 84.5% of external debt now stands at 19.8 years, longer than end-2007’s 18.9 years. For the first time, the National Debt payment horizon lies two decades away, bringing more flexibility than previous Administrations’ yearly time frames.
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- Teodorico Haresco
