Author Topic: Slump in US economy will hurt RP export industry-business leaders  (Read 1378 times)

Scarb

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CHERYL ARCIBAL, GMANews.TV
01/24/2008 | 09:30 AM

 The anticipated slump in the US economy will hurt the country's export industry and dampen and cause the local economy to slowdown, economists, government officials and business leaders agree.

To what extent the US weakness would pull the local economy is where their opinions differ.

University of the Philippines economist Benjamin Diokno believes that aside from weakening exports performance, the US slump will even dampen remittances from overseas Filipinos, among others.

“The direct effect would be through slower exports, lower overseas remittances from overseas Filipinos in the United States, and slower portfolio investments. The housing and credit crises in the United States could have a negative impact on the local high-end housing. With the housing slump and credit crisis in the United States, expect some problems in the local construction industry and bank lending," he said.

But in an earlier statement, POEA Administrator Rosalinda Baldoz said a US economic slump would have no effect on the deployment and remittances of Overseas Filipinos, who she said are in demand because they are more skilled than their counterparts in various countries.

“Walang magiging epekto ito sa kabuuan," Baldoz said.

Another UP economics professor, Cayetano Paderanga, said that if the recession deepens, Philippine exports and business would “lose some market."

“The possible impact of US financial crisis on exports and business would be through worldwide interest rates and availability of funds."

Besides the expected slowdown in the spending of American consumers, exporters will also have to contend with the peso's strength, according to Donald Dee, Philippine Chamber of Commerce and Industry chairman.

“The US recession will definitely have impact on our exports especially combined with the strong peso. However, remittances from OFWs, investments in infrastructures should carry us through this temporary setback in the US economy," he said.

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Scarb

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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #1 on: January 27, 2008, 08:00:58 AM »
Zero growth for export industry

Sergio Ortiz-Luis of the Philippine Exporters Federation warned that with the US downturn and even the high cost of power in the Philippines the export industry may have a “zero growth" for 2008.

“We may have zero growth because of our exchange rate, US recession and cost of power," Ortiz-Luis said.

This, despite government's claim that diversified trade will save the export industry. Government officials have reiterated that the Philippines has improved economic ties with India and China, and is not as dependent on the world's largest economy as it used to be.

In a text message sent on Wednesday from Zurich, Switzerland, Press Secretary Ignacio Bunye reiterated the Palace stand that the Philippine economy is strong enough to withstand an external shock like a possible US recession.

"Clearly there will be some impact on all countries... (but) while a possible slowdown or recession in the US economy could dampen the growth of emerging markets, the Philippines will likely withstand the adverse effects of such a development largely because of its improving economic fundamentals," Bunye said. Bunye then explained that from a fifth of total exports in past years, exports to the US have lessened to 16 percent as a result of healthier trade with China and India.

Economist Diokno counters this claim, explaining that while Philippine exports to the US may have thinned in percentage to total, other economies in the world are still dependent on the US, which will indirectly affect the strength of the local economy.

“The simultaneous plunge in 43 stock markets in the world – including India, China and Europe – is the best proof that the theory is false," he said. On January 22, stock markets all over the world suffered heavy losses due to worries that the US may be facing a recession.

Although Diokno noted that the government's move to improve relations with other countries can offset a possible slack in US consumption, it will only have a limited impact to the Philippines' economic performance “so soon and in a big way".

“And don’t expect diversification to work in a big way at this time when the world’s premier market – the United States – is slowing. With decoupling theory discredited, a US recession means less imports from China, Japan and the rest of the world. It also means less direct foreign investment from US and the relatively weakened developed countries," he said.


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Scarb

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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #2 on: January 27, 2008, 08:03:11 AM »
Hope for the local economy

Like Diokno, University of Asia and the Pacific economist Victor Abola believes a slowdown in exports is a given this year. But with weak exports, local growth, he said, should be pump-primed instead by the government and private sector spending.

“The impact on the export sector will be there, especially in electronics exports,but since exports were already negative in third quarter, and we still grew by 6.6 percent, it is clear that much of our growth is domestic driven," Abola said.

“On the private sector side, strong residential construction is expected based on OFW purchases, while on the commercial sector side, the continuing attraction of BPOs in the country is pushing the demand for quality office buildings. Education is also going very well due to the BPOs and greater demand for RP specialists abroad," he said.

The only roadblock to this plan is the pending approval of the 2008 budget.

“First, have the 2008 budget approved. It should have been passed by Congress and approved by the President before the end of 2007. There are projects and programs that are in the 2008 proposed budget but not included in the 2007 budget. With a reenacted budget, this means that these new initiatives may not be funded and undertaken yet," Diokno said.


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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #3 on: January 27, 2008, 08:04:41 AM »
Government action

The government is planning to do just that, pump-prime the economy, that is, once the 2008 budget is approved.

“We are looking to pump prime the economy to head off any possible adverse effects of the US," National Economic and Development Authority chief Augusto Santos said.

In the meantime, Santos said the government will closely monitor the US situation while sticking to its Development Budget Coordination Committe targets for 2008 of a gross domestic product of 6.3 percent to 7 percent.

He added that there is high hope that the Fed rate cut and the $150-billion economic stimulus plan being outlined by President Bush will be enough to keep the US economy afloat.

However, some analysts doubt that the US will be out of the economic slump soon. This was further bolstered by the emergency rate cut by the Fed from 4.25 percent to 3.5 percent as a sign of panic.

Abola said that with the impact of the US, the Philippine GDP will grow 6 percent to 6.3 percent, lower than the government's target of 6.3 percent to 7 percent for this year. - GMANews

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Logical consequences are the scarecrows of fools and the beacons of wise men. ~ Thomas Henry Huxley~

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Brownman

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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #4 on: January 27, 2008, 08:14:19 AM »
Sis Dylu, what do you think was the causes of recession in the US economy, does it means that their product at the world market were not doing well! louya man sab sa mga 3rd world countries like the Philippines.

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benelynne

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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #5 on: January 29, 2008, 11:01:40 AM »
The fear of recession is a self-fulfilling prophecy.

This started with the collapse of the subprime mortgage market in the US. A great number of housing properties are being foreclosed. Because of increasing bad loan, financial instutions are tightening their belt, if not folding up altogether.

No money to lend to industries, businesses are folding up or laying off, the hordes of the unemployed or underemployed are growing everyday... consumption is down...

The sight downhill is really that of recession.  Even in Japan, supposedly an economic stronghold in Asia, the prospects are bleak.

Many at first believed that Japanese banks were not exposed to the US housing market. But they are, directly or indirectly. And so a dark cloud hovers on the mind of the Japanese. They are tightening their pursestrings as well.

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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #6 on: January 29, 2008, 11:13:00 AM »
Mr.benelynne, that so true. Louy kaayo tong mga naapektohan.
It was just so dreadful to watch the "60 Minutes" TV program last night. One of their segment was about forseclosures of hundreds of houses. Lots of houses were abandoned - owners just couldn't afford anymore. Some even sell their houses lower than the price when they bought it, just so sad.


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benelynne

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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #7 on: January 29, 2008, 11:45:25 AM »
Mr.benelynne, that so true. Louy kaayo tong mga naapektohan.
It was just so dreadful to watch the "60 Minutes" TV program last night. One of their segment was about forseclosures of hundreds of houses. Lots of houses were abandoned - owners just couldn't afford anymore. Some even sell their houses lower than the price when they bought it, just so sad.

Pathetic to be homeless in the supposedly richest country in the world. Maayo pa sa ato kung naay payag....

Watch this "Foreclosure of the American Dream".

http://www.youtube.com/watch?v=SejeITkaOWc&feature=related

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Reply: Slump in US economy will hurt RP export industry-business leaders
« Reply #8 on: January 29, 2008, 11:53:07 AM »
Pathetic to be homeless in the supposedly richest country in the world. Maayo pa sa ato kung naay payag....

Watch this "Foreclosure of the American Dream".

http://www.youtube.com/watch?v=SejeITkaOWc&feature=related

I know, it's so sad. Happenings like this makes me more appreciative of what me and my hubby have.
I couldn't finish watching this video gani Mr.benelynne, murag kumot akong dughan.

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