RP in top shape to survive crisis

BY Ehda M. Dagooc Updated March 28, 2009 12:00 AM

CEBU, Philippines - The Philippine economy is in tip-top shape to survive the United States injected economic virus, or so says acclaimed economist Emilio T. Antonio during the recent economic briefing hosted by the Bank of Commerce.

Antonio advised every Filipino not to panic as the Philippine economy is as healthy as a bull, adding that his pronouncement is backed by facts and not by mere perception or speculation.

However, he said that during tough times, one must be clever and economically literate in order not to be paralyzed by fears.

Unlike crises in the past that hit the Philippines, this time the country was able to cushion the impact and the economy remained upbeat despite some sectors insisting that the Philippines is heading towards an economic disaster.

Antonio, however, warned that politicians who are aiming for a seat in next year’s elections will continue to assert that the country is in economic trouble and that they know how to go about it in order to gain the sympathy of the Filipino voters.

“Brace yourself for the onslaught of doomsday pronouncements,” he said stressing that politicians who wanted to make it in the 2010 elections will do their best to discount the Philippines’ strong economic standing.

“Keep your cool. Check the facts. Don’t lose your focus on business possibilities. How come the gains we have made are hardly appreciated while our failures are magnified beyond imagination? There is a need for economic literacy,” Antonio said.

He said there are only two factors why a country will be severely affected by the “virus” or the fall of giant economies like the United States, which is through direct and indirect contacts.

Firstly, the Philippines do not move in the same social circles as the US and other economies. A nation may be hit through indirect channels, but for the Philippines it has shielded itself well because of sound economic framework, bolstered by the “still” strong Overseas Filipino Workers (OFWs) remittances.

Antonio who was the former dean at the School of Economics in the University of Asia and the Pacific (UA&P), said understanding the true state of an economy is as simple as running a household where key concerns involve cash positioning, balancing income and expenses, and gaining access to other people’s money.

He said the nation’s financial health in the present situation is dramatically different from the past crises we have faced.

“The nation [Philippines] is in surplus, with very little short-term obligations, and with relatively good cash positions,” he said.

The nation’s income is sliced into two sectors—private sector (household and firms) and the public sector, where the government is spending.

Because of surplus in money in the private sector, the Philippines savings rate has moved up significantly, in effect banks now are offering lower interest rates because of surplus in funds. Thus, banks are providing innovative packages to stimulate lending activities.

The unpopular decision of President Gloria Macapagal Arroyo to increase tax collection have actually saved the country from “bankrupt” position, and now the Philippines can afford to spend and it has achieved one of the lowest deficit in recent times. “The nation as a whole is in surplus.”

In terms of attracting foreign investments, although the Philippines has posted a decline last year, but still it is holding on to a positive position.

Undoubtedly, exports is affected, but the country’s real problem in exports is not the declining demand, but rather internal problems that have affected the competitiveness of Philippine-made products.

Filipinos should also zoom in their focus on the growth of the Business Process Outsourcing (BPO), this sector has opened up a lot of new business opportunities for the Philippines, but this supposed “good news” has been tainted by high publicity of negative effects of the global recession.

For BPO, he said “the fun has just begun.” Thus, instead of “wallowing” to a problem that is merely a result of perception or speculation, one must prefer facts over perception.

“Are we more prone to exaggerating our pains and ignoring our gains? Maybe our problems are far bigger [only] in our minds,” Antonio concluded.