The Collapse of Europe and its affect on the Philippines

The funny thing I have noticed over the last year is the way the governments in the West have tried to deal with the economic issues on the economies at the same time smiling and putting a brave face on it as if its going to be ok tomorrow. Today someone sent me an article over regarding Birmingham council who has to clip £180million off its expenses over the next 4 years out of its £1billion budget. It may sound a lot but from experiences within that sector I have seen over expenditure on many things that simply aren’t needed. There will always be the push on “front line services” but they forget to mention the perks they receive such as final salary pensions, early retirement, being able to go sick on full-pay all things most of the rest of the UK cannot get. Then there is a lot of other things that you can research of misspent money. What the government is hoping to do is fill the gap with the private sector but its still not admitting there is a problem that the social system is still way too big and far reaching it needs to drop a lot of the things that do not make any sense and simply get rid of them completely.

Now how does this affect the Philippines your wondering, the whole of Europe and the US are busy shuffling their finances into better positions to reduce debt. The result of this is that the economies are going to remain weak for some time. The result of that being due to the way the Philippines is setup unless things like the healthcare sector reduces worldwide the Philippines remittances will still remain high which in turn will keep the Peso afloat. Downside of that is that your Euros, Pounds or Dollars are going to remain in poor shape for the near future. The UK economy is talking 20 years for a full-recovery but realistically as long as they keep the changes happening the pound should start to improve but not by a lot. Currently about 20-30% has been shaved off its value against the Peso. As a retiree I wonder how many are actually rethinking staying in the Philippines, I have heard people talking of Panama as well as other locations to move to due to being a cheaper and more “foreigner friendly” environment. If the Philippines government isn’t careful it could lose some of the billions of pesos that enter the country via these pensioners to more accepting nations. I could cover the reasons to go over to Panama over the Philippines but I will do that in another topic.

The artificially inflated Peso is the biggest reason people are grumbling though as it affects the pension funds arriving into the country. At the same time the pensions are doing exactly what people are doing with the remittances “inflating” the value of the peso!

6 comments for “The Collapse of Europe and its affect on the Philippines

  1. Ralf Wabersich
    October 11, 2010 at 4:06 am

    Hmmmmmmm… compared with the Peso rate of around 25 to the USD in the late 90’s the present rate of 43 doesn’t really look that bad but of course the 55 level which came with all the political turmoils is gone… that’s true…

  2. Tropicalpenpals
    October 11, 2010 at 4:07 am

    Problem is things arent improving and unlikely to do for sometime if we are lucky. Although if the OFW market collapsed due to downturns abroad how will that affect the Philippines in the long run as well?

    • Ralf Wabersich
      October 11, 2010 at 4:10 am

      I agree, diversification is the key… Tourism for example or any other investment at HOME should bring more stability?

      • Tropicalpenpals
        October 11, 2010 at 4:16 am

        exactly.. easing up on the ownership laws as well as sorting out the land ownership issues for locals as well how much land is unfarmed because its controlled by people who dont need it..

  3. Andrew Swarbrick
    October 11, 2010 at 4:19 am

    The biggest issue here is that the economy has been allowed to stagnate for years because its so dependent on remittance money. It is false economy to do this as sooner or later other countries will be come much cheaper to employ ofw’s than the Philippines and they will be priced out, one only has to look to china to see that there is over a billion people there living on less than a dollar a day and a high number of them are well educated. Each and every country has to do more than simply export people and hope they send money back. The scale of this is simply staggering, in that over 50% of total GDP is remittance money driven, which although in the short terms looks great for a government it simply cannot last. If the money stopped flow for even a week the local economy would go into free fall, such is the dependence. Clearly this position will not be cured overnight as it took 10 to 15 years to get to were we are now but it needs to be corrected. At the moment i hear and see a of words from the government, which in most cases is a big push to stop corruption, which is not a bad thing, however it does seem to be very very light on the job creation front The biggest thing I have heard recently from the president was after his USA trip were he said good news there will be even more jobs for us over in the states I think this proves were this guy is going, the same direction as every other president in the Philippines for the last 20 years keep the remittance coming in that way I don’t have to do much locally! Sad but it looks to be true for now, lets hope for a change!

    • Tropicalpenpals
      October 11, 2010 at 4:21 am

      Thing is stopping it locally is a major problem as it will be blocked at every opportunity. Look at what has happened since Noynoy came to power there has been very little positive news most media concentrates on whining about things rather than what he has already done. The rich don’t want change and who can blame them sitting in an ivory tower only issue is the base is made of glass doesn’t take many cracks to bring it all down around them. The remittance money stopping would be a prime case for that spiral. What I find staggering is the amount of businesses that refuse to trade even locally aswell as empty farms all over the place. The Philippines could easily feed itself and rising the self efficency would actually only go to improve things in a stable manner as its imports would drop drastically. Yes abroad can supply rice cheaper but it doesn’t reach the table at those prices! The Philippines doesn’t pay market value but price wise is probably comparable to Basmati in price once its in a meal