America is definitely in recession. Lately, US president George Bush has lately called on the US Congress to give tax relief to consumers and business to boost the American economy. Many of us are probably wondering how it will impact the Philippine economy.
When America sneezes, the Philippines catches cold. We used to say that to highlight the Philippine economy’s dependence on the America economy. It’s a relief therefore to learn from experts from the World Bank that emerging economies including that of the Philippines could actually deal with this recession in America quite well. The reason? The continuing rapid growth in the Asia-Pacific region, particularly China, is going to cushion impact of the US recession. Says the World Bank lately:
“Resilience in developing economies is cushioning the current slowdown in the United States, with real GDP growth for developing countries expected to ease to 7.1 percent in 2008, while high-income countries are predicted to grow by a modest 2.2 percent."
The World Bank adds:
"GDP in East Asia and the Pacific is expected to grow about 10 % in 2007, with China expected to grow by more than 11%. Growth for the region should ease to 9.7 % in 2008 and to 9.6 % by 2009. The effects from the turmoil in the world’s financial centers may be small in most economies in the Region. Except for China, direct exposures of financial institutions in the region to mortgage-based securities (or sub-prime crisis) are limited.”
The Bank has a favorable prognosis for the Philippine economy in 2007 and expects it to grow by a decent 6.2 percent in 2008. What explains this trend? Simple: these trends are a part of the economic and social transformation obtaining in the Philippines, a trend I call the “Revolution from Beyond.”