The US economy experiencing anticipated slump that will have great effect to the local economy. I don't know how to explain this but I'm pretty sure Pinoy will eventually suffer this year and unemployment statistic rate will get high by the next few months.

The booming call center business, which caters to the US market will faces cost-cutting measures that could include office cease of operations and layoffs. It's because most of BPO companies are suffering from the high exchange rate of peso and dollar. Now that the exchange rate is 40 pesos vs.1 dollar, the management of some BPO companies can't afford to pay $375 per call center agent, they will land their calls to much cheaper location such China, Africa and India. If that's happened, there will be more and more unemployed here.

On the other side, POEA stated it won't really affect the OFW remittances, “US economic slump would have no effect on the deployment and remittances of Overseas Filipinos, who they said are in demand because they are more skilled than their counterparts in various countries”. We all know that the US is the largest source of remittances with more than 40 percent of some eight million Filipinos based abroad, or a 10th of the Philippine population, are in the US. Overseas workers like nurses and caregivers could be reduced, and those professionals working in the United States may not obtain security of tenure.

The Philippines should shift its focus and dependency to other nations like Japan, China and the European Union members.

Thailand suffered a similar reduction in US investment in 2006, partly due to the military coup (even though it was the most beautifully peacefully orchestrated coup I've ever been around to see first-hand) and also because of the fall in the US dollar with the improving Thai baht. The Thai government (forget the name of the reserve bank off hand) tried to put into place measures to devalue the baht just to dissuade foreign investment from packing up and taking off to Vietnam. That's how cold-hearted foreign investment can be. Fair-weather sailors when it comes down to it, too afraid to weather out the storms.

I can't claim much expertise on The Philippines, although I notice a few similarities beyond kick-boxing between the two nations, with respect both ways. English language is one of the advantages of Pinoy, although there must be others on both sides. While I must admit to almost complete ignorance on this thread, the wise local Filipino organisation, more than the foreign worker, might look to the alternate nations you mentioned above to avoid going down with the US ship.

China was my first guess even before opening the thread, but it's a bit of a cliche. Are there many people in The Philippines who spoeak fluent Mandarin, although English speakers seem to manage okay from what I hear second-hand.

There will always be IT requirements in the US under almost any circumstances, and I was impressed to click on the link in your signature. Your mob will be alright no matter what.

I don't think Pinoy here know how to speak fluent mandarin.. Only those who work in the hospitality industries and maybe those half chinese ...

Yeah right we're not affected because we owned intellectual properties and we get royalties from there.. we have IT professionals and we don't need more people to run our business.. just like call center...

But still eventhough the value of peso get high we don't feel the effect. prices still the same... salary still the same... OFW's families suffer the most.. sad...

The impending recession in the US is being claimed by many traders, brokers, and analysts still a speculation as it is right now in volatile waters. Anything could happen in the next couple of days, weeks, and months, although I won’t bet on anything that positive really.

However on the brighter side, the Philippines should make use of this opportunity to forge and strengthen ties with other Asian markets, i.e. China has 13% economic growth, India, and other markets such as Europe, Japan, and the Middle East.

Also, Philippines is not known as an IT services country, but more on BPO – contact/call center, customer care, and a little bit of technical support. We are still far from being an “IT Services Outsourcing” country.

yeah right... we're not yet competitive on IT services.....

That is very true. Its always good to have a stronger ties to countries that are not currently involve in a war or a country that is politically unstable. There would be a big change in america if the democrats win this coming election, each one of them promised a pull out in iraq which has been the main problem in the US economy... we all know that they cant drag this on anymore longer... but then there are other global aspects that can affect the economy like prices of oil, countries that have weak growth... etc...

your not stupid... i like your comment yeah right... countries must have contingency plan A, plan B, plan c blah blah blah... If crisis comes along we have some plan what to do... And having good tie up with other countries aside from US is a very good idea... hmmm Philippines is kinda western ...US mentality...

it already has the exchange rate is bad for OSFW that sends money back home.

That's the consequence when you depend on the U.S. Dolllar!!

The housing and credit troubles, China's emerging economic boom and rising fuel costs worldwide are the problem behind the US's economic troubles.
http://www.reuters.com/article/marketsNews...20080113?rpc=44

It was only a little over ten years ago that Asia had an economic chaos, but it recovered and came back stronger.
http://en.wikipedia.org/wiki/Asian_financial_crisis

Iraq is just a small part of it. Think back and you'll notice that the US-peso rate was at it's highest between 2003-2005.
Why do you think the US economy was still strong even when the US invaded Iraq 5 years ago?

Slump in US economy will hurt RP export industry - business leaders
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.

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.

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.

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.

Villar said that before every PINOY feel the effect of the stable economy, it should be stable for 4 years then by that time people will feel the effect of the good economy..hmmmmm....

It would be very interesting to see if the Chinese decided to dump the U.S. Dollar by selling off the stake they have in the U.S. Treasury Bill and Notes. I wonder how is that going to affect the RP economy!!!

i wonder what will happen to China if USA goes broke. your export is 90% us-bound
and besides you gdp per capita income is not that high, where will your CLOTHS and othersubstandard
products go.

There's always a sucker born in every second!!!

...and over a billion of those seconds are counted in China.

yeah right and chi73 ranks number 1 in the list

oh god this why you guys need to be educated so that you can be competitive against others.

and when i say competitive against others I MEAN OTHER COUNTRIES, NO YOURSELVES...LEARN TO WORK TOGETHER.