Economic Problems of the Philippines Essay

Economic problems of the Philippines are very similar to those being battled by other(a)wise underdeveloped and developing earths. After a long tryst with colonization, the nation is now grappling with increased imports and a mixed providence that is compose to stabilize.The Republic of the Philippines is located in Southeast Asia and Manila is its capital city. The landed estate comprises 7,107 islands and ranks as the 12th most populous country in the world. manage most other southeast Asian regions, the Philippines too has a write up of European colonization. It was a colony of Spain and the USA. The country is now home to quaternary cultures and traditional ethnicity. It is in any case looked upon as a perfect example of a mixed thrift. Industrialization is a new development in the Philippines. Traditionally, the miserliness stabilized on the agrarian contributions and the manufacture of garments, pharmaceutical products and semiconductors. In the tolerate decade, el ectronic exports added to the exports, including various products obtained by digging.The economy of the nation also largely depends on the remittances from Filipinos residing everyplaceseas and investing in the homeland. However, exports are non evenly balanced by the imports that include heavy electronics, garments, various bare materials, intermediate goods and fuel. The influence of the Manila galleon on the nations economy during the Spanish period, and bilateral trade when the country was a colony of the linked States has resulted in the preference of a mixed economy everyplace a centrally planned or market based one.It is very all important(p) to understand the shift during the Ferdinand Marcos leadership, from a market economy to a centrally planned economy, to relate to the economic recession that the country is now facing. With adverse global trends and the world economy entering a protracted depression, in 2011, the Philippines faced another economic downturn. The countrys lack of inside economic strength due to the absence of core manufacturing sector and an absence of firm and bold domestic form _or_ system of brass initiatives have led the economy to be dependent on the state of the global economy. Thereby make it vulnerable to external shocks.Here we try to look at triple possible challenges posed to growth and genuinely development of the economy in 2012, based upon the insights provided by the economic policy-making and decisions by the Aquino administration in 2011.Major Financial Problems of the PhilippinesOver-dependence on Global Economy The growth of the Philippines economy drastically slowed to serious 3.6% in the first three quarters of 2011, which is importantly slight than the 7%-8% growth targeted by administrations Philippine Development Plan (PDP). Though the slowdown may have been due to the ongoing global crisis, it was markedly slower in comparison to other South-East Asian neighbors. Economic performance figur es indicated a contraction in exports and a drop in FDI. Though the remittances from overseas Filipinos to the country grew in the first ten months of 2011, however the compensation that overseas Filipinos received genuinely fell, in peso terms, due to an appreciating peso.In 2011 the Aquino administration sought a FTA (Free Trade Agreement) with the EU and join the Trans-Pacific compact (TPP). The administration further allowed the US to even more directly influence Philippine economic policy making in its self-interest, by entering in a Partnership for Growth (PfG). These partnerships will consequently further the dependence of the economy on the global economy, whereas a regional arrangement between less uneven Southeast Asian countries is potentially useful. Greater attention has to be pay to addressing to the internal problems of the economy and enhancing domestic-oriented growth. A policy of removing structural impediments to growth has to be adopted with lesser focus on f oreign investors and exporters.Unemployment The official unemployment figures for the Philippines in 2011 are among the worst in Asia, higher than its South-East Asian neighbors and harmonise to the International Labor Organization the country is among the worst one-fourth in the world in terms of unemployment rates. Without a strong manufacturing industry or accepted Filipino industry, the economy will be unable to fashion enough decent remunerative jobs. Till then manufacturing or work will remain substandard, or of low value-addition. According to employment figures, jobs in the Philippines manufacturing sector increased by just 8% of the total employment. to the highest degree three out of every ten people in the chore force are looking for work or are jobless. The mining sub-sector said to be one of the fastest growing industry in 2011 failed to generate new jobs (just 0.6 % of total employment).Steadily rising inflation has contributed to the wear of the value of the m inimum lock. Though the Aquino administration increased the minimum wage and announced cash dole-outs but lack of quality decent paying jobs and higher real wages continue to be a problem. The governments policy to encourage foreign capital, even if in just low value-added assembly operations will continue to hinder real growth and development of the manufacturing sector. The Aquino administration needs to plan over the long-term, and coif an industrialization program that encourages value-addition manufacturing or services and builds Filipino-owned industries. place Fiscal ascesis Practicing fiscal austerity just to get favorable credit ratings digest be counterproductive. The Aquino administration, in 2011, pursued fiscal austerity and spent 2.1% less in the first 11 months than it did in the same period last year. This along with increased revenues brought down the fiscal deficit and subsequently worldwide credit rating agencies Standard and Poors, Moodys and fitch upgraded the countrys credit ratings and outlooks. In 2011 the government cut using up on economic services, including infrastructure, in the same vein did not read in for shortfalls in education, health and housing sectors. As a result, over the first three quarters of 2011, income from public construction contracted by about 46% whereas government consumption reduced by a mere 1.7% in comparison to the same period last year.Misplaced austerity measures and an exaggerated concern about credit ratings contracts the economy, reduces demand and undermines afterlife growth. The proposed public private partnerships (PPPs) are a poor substitute to real investment and public expenditure, because the former are majorly driven by short-term profit while the latter play a vital case to create development.These are just some of the economic challenges looming large over the Philippines. The country is facing significant decline in industrial production, rough domestic product, income and employme nt and sales. The Aquino presidency supposedly is getting the support of the people, as indicated by its high approval ratings, for the necessary economic measures that are in the general public interest. In 2011, the Aquino administrations policy choices to feed in greater weight to narrow foreign and domestic elite interests, unfortunately, underscores the challenge of pushing for real reform in 2012.