Commentary: RP economy "less vulnerable" to global recession
By Henry S. Lagasca
San Fernando City, La Union (20 November) -- Economic momentum is slowing in world economy and the danger of inaction were stark.
The financial crisis continues to wreak havoc in the world's major economies – the United States including the 15- nation European economy and Japan which are now in technical recession.
In technical terms, a recession happens when the Gross Domestic Product (GDP) contracts for two consecutive quarters. GDP is the value of goods produced and services rendered in the country in a given period.
President Gloria Macapagal-Arroyo's advocacy to bolster the country's ability to cope with the crisis in getting wealthy nations to include poor countries in a common international agenda to weather the fallout of the global financial blowup is her initiative to lead the government's economic team and in doing her homework even on official trips abroad.
PGMA's initiative to call on ASEAN +3 countries to consider allocating a bigger chunk of the $80-billion Chang Mai Initiative (CMI) as a quick-disbursing fund for ASEAN member- countries whose economy may suffer from the global economic meltdown.
At home, President Arroyo is hands on in monitoring the global economic situation and directing her economic managers to be responsive to changes to maintain a vibrant economy.
The Arroyo government claims that the Philippine economy would only experience a slowdown because of structural reforms in the financial sector. Thus, the Bangko Sentral ng Pilipinas (BSP) insists that "the country's economy is on solid footing" attributed to fiscal reforms, stable external payments position, and dividends from structural reforms.
The Budget department has directed government agencies to fast-track spending on projects and programs to bolster pro-poor program in the face of the global financial crunch.
Budget Secretary Rodolfo Andaya said that the P1.4-trillion national budget next year could provide a stimulus package that the government is preparing.
The controversial expanded value-added tax (EVAT) law which President Arroyo admits has dragged down her approval rating, has turned out to be the engine for growth of the Philippine economy. The government generated P972-billion in revenues and spent 1.04-trillion from January to October this year.
If we go by the records, the government incurred a budget deficit of P9-billion as of October but revenue collection is trying to catch up with the government expenditures.
The BSP also vowed to manage money supply prudently – meaning support to PGMA's policies that will help insulate the economy against global risk and to maintain a strong banking system.
The President is responding to changes in the global financial conditions and meeting challenges ahead because" there is a lot of volatility in the international market, and we are not immune to the global recession".
In a separate report, the World Bank said the Philippines was "in a better position" to cope with a global slowdown, but was "less vulnerable" to it because it had taken fundamental macroeconomic reforms even before the escalating fuel and food prices.
PGMA's economic team is also focusing on the pressing concern on the slowdown on growth of the country's economy in terms of imminent decrease in exports and overseas remittance influx. (PIA Region 1) [top]