World Economic Crisis 2009
The Philippine National Administration (Malacañang is a reference to the Philippine version of the American White House) is preparing to implement an economic stimulus package in 2009. The stimulus package is called the “economic resiliency plan.” This plan will invest in infrastructure and will provide additional jobs and plans to spend 330 billion peso, most of it within the first half of 2009.
New Jobs
The plan includes 100,000 new jobs by the end of the month! The jobs will include street sweepers. Other jobs will be created in the building and repair
Philippine President Gloria Arroo
of new schools, irrigation systems and bridges. The target is for 1 million new jobs by the end of July.
President Gloria Macapagal-Arroyo said the package will also provide social protection and ensure growth in the Philippines even while most of the world is caught in recession.
Other jobs may be part of the “livelihood programs” were small and medium size businesses will receive assistance in hiring new employees.
I have seen skepticism about this plan as one Filipino economist, a professor at a Philippines University, suggested it was all talk and little action. I’ll have to take a watch and see position. I have to witness Philippine history in process before I will have a better understanding of the process here. To me, it appears the President Arroyo’s administration is ready to implement this plan.
Expat Finances
For the expat living in the Philippines, this will have a downward pressure on the Philippine Peso and help keep the dollar’s value higher. Now this does not mean the dollars value will rise. Many factors effect that, including the downward pressures present in the US. At this time, the dollar remains strong and that may continue. I certainly hope so but I don’t understand why the dollar would continue to rise in value with 1 trillion spent in the US economic stimulus package.
For January there has been very little change in the value of the dollar vs the peso. I wonder if the Philippines Central Bank can still be expected to lower interest rates with this new indication of the government’s willingness to implement the “economic resiliency plan.”
Tagged with: Expat Finances • Philippine Peso • Philippine Presidential Palace
Filed under: Living In The Philippines
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Hi Rusty – Many Filipino economists and financial players are still saying that the Peso to Dollar exchange will be P52:$1 by the end of the year. I think we will see the dollar improve.
I hope so. The dollar has been very strong against western currencies. The pound hit a seven year low yesterday.
I heard some number that suggest Obama’s spending program will equal 25% of the GNP. I heard it Fox news so I doubt it is true. If so, that sounds highly inflationary to me. It would be under normal circumstances but this is not normal.
Right now, the peso / dollar is changing very little. I’ve never seen this small amount of change. I’ve been following it t some extent for the last three years. I’m sure you’ve been following for a good bit longer.
The economy is doing so poorly that the dollar may stay up against the Peso. That doesn’t make a lot of sense to me.
Where the government to practice lazzie-fare capitalism it would make sense but if the government were to do that, there would be a collapse of the American banking system. Consumers wont spend. When that happens it is appropriate for the government to step in and that’s what it plans to do.
If the GNP falls by the same percentage excluding government stimulus then the 25% wouldn’t be inflationary and the dollar will remain strong. The dollar went up in October and November because the banking \ credit crises made the dollar hard to get.
When those packages were announced and some implemented that is when the dollar fell again.
Far too often financial experts make predictions based on their own positions in the market rather than what makes sense. I really need the dollar to go over P50 but I don’t think it will.
I’m going to start adding more currency data but I’m down to one PC and my assistant has trouble getting on the PC as I’m hogging the one we are down too.
Hi Joe. I’d like to know what are your personal recommendations for the Philippine stimulus package? What would you want to see in it?
Hello B! Thanks for the question. What do you think would be the best stimulus for the Philippines?
B, I’m hesitant to apply to the Philippines what I learned about finance and economics while in college in the US.
I am also reluctant to write opinion on what I think the government of the Philippines should do. Filipino may be small in frame but they are huge in pride, and rightfully so. They have much to be proud of.
In a selfish mode, I’ve seen some economist hold out a good way to stimulate would be if the Bangko Sentral ng Pilipinas (BSP) or central bank of the Philippines would push the value of the dollar to Peso up. The reasoning on that is much of the economy is driven by overseas workers. That seems like a band aid to me and unhealthy for the economy in the long run. Sometimes though you have to do something NOW in order to prepare for the future. For me personally, the dollar at P55 to 1USD would be wonderful.
The government trying to add jobs seems to be the right way to go. The Philippines needs more higher paying jobs. Until that happens, I don’t see how the poverty will end in this country.
That is something though that would make my life here very difficult. I realize that my good fortune is far too often on the backs of the hard working Filipino. I didn’t cause the situation, but it bothers me just the same. The pay here is just too low for the majority of Filipino to dig themselves out of poverty.
Yesterday I watched a street vendor board a bus. He was selling water. One person decided just as the bus was about to leave they wanted water. Then the vendor had to exit the bus while it was going at a significant speed. I would guess about 20 miles per hour. He had to exit anyway. He’s a professional at what he does. If I had left the bus at that speed I would have been badly hurt. The water vendor though jumped and with great caution and expert balance stayed on his feet. One could hear his flip flop land with extreme force on the pavement as he made several steps to gradually reduce the speed at which he was traveling. This even got Jessie’s (Filipina GF) attention. She said something like he’s crazy. He is working very hard for a few peso a day.
I am an outsider here, so I will not be critical of the government but it does seem like creating more jobs is the way to go.
For me, I’m for extremely limited government. I like to see the government stay out of things. In the US it is referred to as a libertarian. However, I’m more reasonable in my approach than most that call themselves libertarian. I recognize there is a time for all things and in a world recession boarding on depression, that’s when a government should act. Government should do the things that we as individuals cannot do. That’s my simple theory on government.
The Filipino is far more experienced with their own economics and politics than I am and will defer to their wisdom.
China doesn’t want its currency to appreciate because by keeping the yuan low, they are able to export their goods at a cheaper price. China competes with Brazil, Russia, and India amongst others for exporting goods, and by keeping the yuan artificially low, China is able to gain that advantage of being able to sell your goods at a cheaper price. Cheaper prices looks more attractive to buyers who then may have a favoritism to China because of that reason.