Why is the Philippines better off than other countries in Asia and elsewhere in the world in cushioning the impact of economic slowdown?
The Philippines is lucky to have thousands of overseas filipino workers(OFWs) who continuosly send money to their families and relatives in the Philippines. In the past few years, Filipinos probably did not know that these foreign exchange remittances will later help the Philippine economy in cushioning the impact of the current economic slowdown of the worlds leading economies.
According to Standard and Poor, the Philippine economy is much better that the other countries in Asia "because the government was able to make the necessary adjustments and reforms when times were still good". It added that "the Philippines was able to face the global market problems and economic slowdown from a considerably improved position compared to what they were 3-4 years ago".
One of the contributory factors that make the Philippine economy better prepared from the other countries in the region, is the multi-billion dollars inward remittance of overseas Filipino workers. Latest estimates show that some 8 million OFWS working in many countries all over the world, are sending approximately $15 billion dollars a year. This foreign exchange inflow are spent by the families and relatives on consumer goods which in effect increased their purchasing power. This is good for the economy because it promotes the exchange of goods and services, thereby creating domestic employment and promoting productivity in most sectors of the country.
A substantial portion of the foreign exchange remittances of these overseas Filipino workers are invested in land and housing. During the last few years, there has been a steady increase in housing acquisitions by these OFWs. This is definitely good for the economy because the housing and construction sector generate employment for the domestic workers. It also supports small businesses engaged in the supply of construction materials and other products for the construction industry.
There are other sectors that contributed to the preparedness of the domestic economy in confronting the world economic slowdown like the sudden and substantial inflow of investments in the mining sector and the increasing popularity of the Philippines as one of the best outsourcing venues in the region. Investments in these areas have contributed immensely in generating employment for the Filipino work force.
In addition to the regular and substantial foreign exhange remittance from overseas workers, the Philippines is indeed lucky to have these sudden upsurge of foreign investments in the mining sector including oil exploration. A few days ago, production of oil started in a Palawan oil discovery site which represents 10% of the Philippine oil imports.