Franklin

Philippines Quarterly Update, June 2010 [electronic resource] : The Recovery Continues Despite Global Financial Turbulence.

Author/Creator:
World Bank.
Publication:
Washington, D.C. : The World Bank, 2010.
Format/Description:
Government document
Book
Series:
Economic Updates and Modeling
World Bank e-Library.
Economic Updates and Modeling
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Local subjects:
Access to Finance. (search)
Accounting. (search)
Agriculture. (search)
Capital Flows. (search)
Commodity Prices. (search)
Credibility. (search)
Credit Default Swaps. (search)
Currencies and Exchange Rates. (search)
Depreciation. (search)
Developing Countries. (search)
Economic Forecasting. (search)
Economic Growth. (search)
Exchange Rates. (search)
Expenditures. (search)
Exporters. (search)
External Shocks. (search)
Finance and Financial Sector Development. (search)
Financial Crisis. (search)
Fiscal & Monetary Policy. (search)
Fiscal Policy. (search)
Gdp. (search)
Global Economy. (search)
Inflation. (search)
Insurance. (search)
Investment Climate. (search)
Labor Market. (search)
Legal Framework. (search)
Living Standards. (search)
Macroeconomic Shocks. (search)
Macroeconomics and Economic Growth. (search)
Market Forces. (search)
Monetary Policy. (search)
Natural Disasters. (search)
Natural Resources. (search)
Population Growth. (search)
Poverty Reduction. (search)
Public Debt. (search)
Recession. (search)
Regulatory Reform. (search)
Remittances. (search)
Risk Aversion. (search)
Securities. (search)
Slowdown. (search)
Supply Side. (search)
Transparency. (search)
Uncertainty. (search)
Unemployment. (search)
Yield Curve. (search)
Summary:
The Philippines economy posted robust growth in early 2010, in part due to large one-off factors. As did many countries in the region, the Philippines benefited from a strong rebound in global trade. Manufacturing and investment activity expanded briskly as a result. Private consumption continued to expand, as consumer confidence improved. Growth also benefited from election-related spending. Expansionary (and now pro-cyclical) fiscal policy continued to support growth. Despite a withdrawal of liquidity-enhancing measures and a stronger peso, a closing output gap meant that monetary policy remained accommodative. A World Bank study of Philippines migration pattern during the global recession reveals that deployment of overseas foreign workers (OFWs) actually accelerated during the crisis. Partly this reflected the fact that the top OFW destinations were not as affected as the rest of the world. The most affected OFWs were males, production workers (especially construction workers) and new hires. By contrast, females, services workers, seafarers and rehires proved resilient to the crisis or even benefited from it. Globally, less tolerance towards weak public finances is expected, raising the need to introduce a credible medium-term fiscal consolidation plan for the Philippines. Running a pro-cyclical fiscal policy with relatively high debt and limited fiscal space-as undertaken in the first-half of 2010-raises risks and should be reverted. Credibility towards such a goal could be achieved, for example, by designing a comprehensive multi-year reform package. As the output gap closes, the accommodative monetary policy introduced in 2008 would need to be gradually unwound, starting by reaching a broadly neutral stance in 2010. An increase in policy rates currently negative or slightly positive could achieve such a goal.
Contributor:
World Bank.
Publisher Number:
10.1596/27763
Access Restriction:
Restricted for use by site license.