An economic storm a-brewing
June 25, 2008 § Leave a comment
Typhoon Frank may have left us not only rotting bodies but a seriously battered economy. After news broke out of the devastation caused by Frank, the Philippine stock market reacted negatively. At least 5 percentage points down. I shudder to think what would happen should government really report the state of the nation with 37 provinces affected by the typhoon. Yesterday, the peso slid to nearly 45 pesos per green buck, an indication that less remittance money are going in, proof that overseas Filipinos are feeling the brunt of the global fiscal crisis. That explains why the Bangko Sentral released a few millions of the green buck to the market to at least try to mitigate the effects.
It may not be today nor tomorrow, but the full effects of Typhoon Frank will be felt possibly in July or August. It may take several strong storms before our economy collapses with the full weight of the US sub-prime crisis and a ballooning fiscal deficit. Frank may even be of the least effect because a report shows a substantive slowdown in FDI (Foreign Direct Investments), a sign that foreign investors have taken a cautionary stance regarding the Philippines. The Asian Development Bank (ADB) said that they’re expecting a moderate 5% growth for the Philippines this year, reflecting popular sentiment that the Philippine economy is slowing down considerably faster than other Asian economies.
Inflation may also slide to double digits this coming month, with rising fuel and food prices. Companies may find it hard to sell their stuff since Consumer Confidence remains lower than previous year’s.