The Philippines, an island country, is far from being decoupled from the outside economically.
In recent months, the ripple effects of the global financial crisis have reached the Philippine shores and started taking its toll on the country's economy.
In its latest report, the Philippine National Statistics Office said that the country's export receipts in October 2008 totaled only 3.971 billion U.S. dollars, down by 14.8 percent from last year's 4.660 billion dollars.
For the first ten months, total exports posted a growth of 1.9 percent to 42.838 billion dollars from 42.019 billion dollars in the same period of last year, due to weak demand from the United States, Japan and other traditional markets of Philippine products.
Earlier, local goods sold abroad were projected to increase by 5 percent to 7 percent. It has been revised to two to four percent.
Meanwhile, the statistics agency reported that consumer prices in the country from January to November rose to 9.4 percent from 2.7 percent in the same period of last year.
For the whole year, the inflation is targeted between 9 percent to 11 percent.
High prices have eaten into the profit margins of companies, thus curtailing any aggressive expansion plans.
Lower exports and high inflation reduced the country's economic performance for the first nine months of the year to 4.6 percent, much lower than last year's growth rate of 7.3 percent.
Alongside with the economic slowdown, there came the swelling number of jobless Filipinos.
The country's unemployment rate rose 6.8 percent or 2.525 million in October 2008 from 6.1 percent or 2.246 million during the same month of last year.
The worrisome number of jobless Filipinos reflected the deterioration of the domestic labor market owing to the weaker Philippine economy and that higher misery is expected for Filipino workers, analysts said.
The financial markets also felt the pinch of the global crisis although the banking sector is less impacted compared with economies like Singapore and China's Hong Kong.
On Oct. 27, the stock market experienced its worst fall in a single day when the benchmark Philippine Stock Exchange index plunged 12.3 percent as investors fled on worries that the world is on a brink of a global recession. Trading was halted for 15 minutes to prevent the index from sliding down further. This marked the biggest drop since the Asian financial crisis of 1997.
The local stock market closed at 1,872.85 points on Dec. 24, the last trading day this year, almost only half last year's close of 3,621.6 points.
Peso, the local currency, closed at 47.52:1 against the green back, falling nearly 15 percent from 41.52:1 at the close of trading in 2007.
To stimulate the economic growth, the Philippine central bank BSP decided earlier this month to cut interest rates by 0.5 percentage point in spite of the high rate of inflation.
The movement brought the borrowing rate to 5.5 percent and the lending rate at 7.5 percent.
"Such action is expected to reduce domestic borrowing costs, which could stimulate consumer spending and assist sectors such as manufacturing, construction, and small and medium enterprises," said Amando Tetangco, chief of the central bank.
The government had abandoned its goal to achieve a balanced budget by 2010 and announced an "economic sustainability plan," costing some 300 billion pesos (6.3 billion dollars) to keep the country afloat amid the global downturn.
The Philippines expects to incur a deficit of 75 billion pesos (1.58 billion dollars) or 1 percent of gross domestic product (GDP) in 2008 and 102 billion pesos (2.15 billion dollars) or 1.2 percent of GDP in the coming year.
However, the Manila-based Asian Development Bank said that with its "public debt at about 60 percent of GDP, the Philippines may have little scope for further fiscal expansion."
Besides, the country's external debt stood at as high as 53.5 billion dollars as of the end of September.
Foreign direct investments continued to flow into the economy as of September, but lower than the year-ago level due to uncertainties amid the spreading financial crisis.
The January-September tally reached just 1.39 billion dollars, 45 percent less than the 2.52-billion-dollar net inflows recorded in the same period of last year.
The BSP expects a 2.6-billion-dollar net inflow of foreign direct investments by year-end, compared to last year's 2.7 billion dollars.
As one of the few bright lights amid the doom and gloom of the global crisis, the business process outsourcing (BPO) industry is expected to grow by 40 percent this year in the Philippines, with revenues of around 7 billion dollars.
Industry experts say that the U.S. recession would result in more BPO investments in the Philippines since more companies would cut costs by outsourcing some of their functions to the underdeveloped, English-speaking country. But no one believes that the industry, still in its infancy, alone will save the country's economy.
What the Philippines depends more on is the remittances of the overseas Filipinos.
More than 8 million Filipinos are living and working abroad, who remitted more than 13.7 billion dollars to the local economy from January to October this year and are expected to send a total of 16.9 billion dollars by the end of the year, 13 percent higher than in 2007. Marianito Roque, Secretary of the Department of Labor and Employment, attributed the increase to the larger number of Filipino workers deployed overseas this year.
Approximately 25.5 percent more Filipinos were deployed during the first ten months to 1.15 million this year from 888,339 last year.
Remittances from overseas Filipinos provide a buffer for the country's economy against the impact of the global turmoil.
However, some analysts forecast a sharp fall of incoming remittances after the Christmas season as a result of recession in countries hosting a large number of Filipino workers.
According to Teresa Soriano, Assistant Secretary of the labor department, more than half a million overseas Filipino workers are at risk of losing their jobs amid the global meltdown.
Of the figure, 268,000 are factory workers from South Korea, and China's Taiwan and Macao; 130,000 are cruise ship workers; 129,000 are those holding temporary work visas in the United States; and the remaining 48,000 are household service workers in Singapore, and China's Hong Kong and Macao.
Consumer spending, the main driver of domestic expansion and driven by the overseas remittances, had slowed considerably as investment spending did, and is expected to slow down further without sufficient lifeblood.
According to the government, the Philippine economy is likely to expand 3.7 percent to 4.7 percent next year.
The Asian Development Bank painted a grimmer picture, citing weak exports and lower private consumption as the slowdown's main culprits.
In its latest Asia Economic Monitor report, the bank forecast that the Philippines' economic output will post a sluggish growth of 3.5 percent.
Some other economists are even more pessimistic.
Private think-tank Economist Intelligence Unit said the Philippines will only expand by 1.8 percent in 2009.
The country will be plagued with higher unemployment and lackluster domestic consumption, according to the research and advisory company, with more than 40 offices worldwide.
"Weaker external demand and domestic investment will lead to higher unemployment and will constrain consumption growth," it added.
Investments in the emerging economy are also seen to decline as foreign direct investments slow and Philippine companies encounter difficulty to raise capital from international markets.
Moreover, the think-tank said that overseas remittances will be sluggish, diluting its strength to prop up domestic consumption in the country.
Besides, the country's external debt stood at as high as 53.5 billion dollars as of the end of September.
Foreign direct investments continued to flow into the economy as of September, but lower than the year-ago level due to uncertainties amid the spreading financial crisis.
The January-September tally reached just 1.39 billion dollars, 45 percent less than the 2.52-billion-dollar net inflows recorded in the same period of last year.
The BSP expects a 2.6-billion-dollar net inflow of foreign direct investments by year-end, compared to last year's 2.7 billion dollars.
As one of the few bright lights amid the doom and gloom of the global crisis, the business process outsourcing (BPO) industry is expected to grow by 40 percent this year in the Philippines, with revenues of around 7 billion dollars.
Industry experts say that the U.S. recession would result in more BPO investments in the Philippines since more companies would cut costs by outsourcing some of their functions to the underdeveloped, English-speaking country. But no one believes that the industry, still in its infancy, alone will save the country's economy.
What the Philippines depends more on is the remittances of the overseas Filipinos.
More than 8 million Filipinos are living and working abroad, who remitted more than 13.7 billion dollars to the local economy from January to October this year and are expected to send a total of 16.9 billion dollars by the end of the year, 13 percent higher than in 2007. Marianito Roque, Secretary of the Department of Labor and Employment, attributed the increase to the larger number of Filipino workers deployed overseas this year.
Approximately 25.5 percent more Filipinos were deployed during the first ten months to 1.15 million this year from 888,339 last year.
Remittances from overseas Filipinos provide a buffer for the country's economy against the impact of the global turmoil.
However, some analysts forecast a sharp fall of incoming remittances after the Christmas season as a result of recession in countries hosting a large number of Filipino workers.
According to Teresa Soriano, Assistant Secretary of the labor department, more than half a million overseas Filipino workers are at risk of losing their jobs amid the global meltdown.
Of the figure, 268,000 are factory workers from South Korea, and China's Taiwan and Macao; 130,000 are cruise ship workers; 129,000 are those holding temporary work visas in the United States; and the remaining 48,000 are household service workers in Singapore, and China's Hong Kong and Macao.
Consumer spending, the main driver of domestic expansion and driven by the overseas remittances, had slowed considerably as investment spending did, and is expected to slow down further without sufficient lifeblood.
According to the government, the Philippine economy is likely to expand 3.7 percent to 4.7 percent next year.
The Asian Development Bank painted a grimmer picture, citing weak exports and lower private consumption as the slowdown's main culprits.
In its latest Asia Economic Monitor report, the bank forecast that the Philippines' economic output will post a sluggish growth of 3.5 percent.
Some other economists are even more pessimistic.
Private think-tank Economist Intelligence Unit said the Philippines will only expand by 1.8 percent in 2009.
The country will be plagued with higher unemployment and lackluster domestic consumption, according to the research and advisory company, with more than 40 offices worldwide.
"Weaker external demand and domestic investment will lead to higher unemployment and will constrain consumption growth," it added.
Investments in the emerging economy are also seen to decline as foreign direct investments slow and Philippine companies encounter difficulty to raise capital from international markets.
Moreover, the think-tank said that overseas remittances will be sluggish, diluting its strength to prop up domestic consumption in the country.
