Wednesday, July 16, 2008

Philippines will weather the economic storm!

That is my forecast.

This time its impact is peanuts compared to coconuts during the currency crisis triggered by the Thai Baht in the late 1990s.

Sure, inflation was high last month, and more is due this month. But it is going to be peanuts, which I will explain later.


Now let go to the US.

Fannie Mae & Freddie Mac are currently in trouble. IndyMac collapsed (5th this year). A hundred more banks are expected to follow IndyMac's demise in a few weeks or months!


IN Europe, a recession is expected. British workers are striking, while workers of Lufthansa are now collecting ballots for a strike. Housing market in Spain is in a free fall, and the country will probably enter a recession this year. Inflation is high accross the Euro Zone.


All I am saying is it is happening all over the world (even in China to some extent).


So why did I say: Philippines will weather the economic storm?


Majority of Pinoys are farmers. Rice prices doubled during the past 3 months so when harvest comes in September-November their incomes will double, right? Also, the prices of copra which is produced all over the country is in its highest today, actually by 60% compared to last year.

That is why majority of Pinoys will weather the storm.


The sector that will suffer most are:

1. Government employees. But teachers are suppose to get adjustments of 9K over three years. And increases on other department of governments are on-going.

2. Private sector employees - this group will be hit hard. The government should focus on this group - they should start dangling the Regional Wage Boards - to provide a bit of hope ...or else a massive workers strike could happen a month or two from now!


NFA should focus more on urban areas where most private sector employees are concentrated! They could even withdraw their rice distribution where rice is produced such as Nueva Ecija and Central Luzon, in the Visayas except Cebu, in Bicol, among other provinces in the country - to make sure the these sector will have a light ride during these trying times.