The Philippines entered the crisis on a sound footing relative to its major East and Southeast Asian neighbors (except Indonesia), which commonly experienced economic contraction, especially in the industrial and export sectors. As such, this has been suggested as evidence of the country’s newly gained economic resilience. It must be noted, however, that the Philippines has likewise not experienced the spectacular economic performance of its neighbors in recent times, which saw their per capita incomes more than doubling during the past three decades. In contrast, per capita income in the Philippines today is only roughly one-fifth higher than it was 30 years ago. Even as the crisis badly hit investments and exports, which fueled rapid growth in East Asia’s “early globalizers”, it is highly unlikely that it would wipe out the region’s economic and social gains during the period. On the other hand, because the Philippine economy has missed the opportunities for economic growth in recent decades, the country has a rather weak capacity to cushion the impact of the crisis on the poor, whose number have increased substantially in recent years even before the onset of the crisis. The proportion of the population deemed poor rose from 31.3percent in 2000 to 33.0 percent in 2006 despite the increase in GDP per capita of about 2.7 percent a year during the same period. While the economy has escaped recession, substantial erosion in human welfare is likely to occur given past failure to reduce poverty. The country’s GDP fell sharply from 7.1 percent in 2007 to 3.8 percent in 2008 and 0.9 percent in 2009. Considering the country’s rapid population growth rate of 2 percent a year, this means the per capita GDP in the Philippines for 2009 had a negative growth of 1.1 percent. II. Background of the Crisis
The Philippines has long been undermined with long-term structural problems such that sustainable economic development is yet to be a dream come true. According to the pages of Philippine economic history, the country has been dominated by a sequence of growth spurts, brief and mediocre, followed by shard to very-sharp, severe, and extended downturns—a cycle that came to be known as the boom-bust cycle. As such, economic growth record of the country has been disappointing in comparison with its East Asian counterparts in terms of per capita GDP. What makes matters worse is the seemingly perennial impoverished state of its inhabitants, that is, in 2007, an absolute poverty incidence of 13.2 percent—higher than Indonesia’s 7.7 and Vietnam’s 8.4 percent—has been recorded, and thus giving further testimony of the unequal distribution of wealth that keeps growth and development a far reach for the Philippines III. Impact
The tepid performance of the Philippine economy in 2009 partly reflects the effects of the global economic crisis on the country. GDP grew at 0.9 per cent in 2009 compared to 3.8 per cent in 2008. GNP grew at a faster rate of 3.0 per cent in 2009 buoyed by the incomes of Filipinos earned overseas, but slower than the 6.2 per cent growth in 2008. There are more than 810,000 Filipinos who work as land-based overseas contract workers in different parts of the world. The level of unemployment in the country reached 7.1 per cent in October 2009 compared to the previous year’s figure of 6.8 per cent. Underemployment rose to 19.4 per cent from 17.5 per cent during the same comparative period. The Philippine population is over 88 million, with a population growth rate of 2.04 per cent. In 2009, per capita GDP declined by 1.0 per cent compared to a 1.8 per cent growth in 2008. Per capita GNP grew by 1.0 per cent in 2009 compared to a growth of 4.1 per cent in the previous year.
Impacts of Asset Markets, Financial Sector, and Real Sector The freeze in liquidity in US and European financial markets reversed capital flows to developing countries and induced a rise in the price of risk which entailed a drop...
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