Bit of an odd one for me being British but will the low dollar cause Americans to leave the Philippines is a question I have pondered over the last 2yrs. But for different reasons than the obvious I have found the increasing cost of living in the Philippines being estimated by myself and others at around 30% a figure nobody else seems to talk about but expats and that’s within a year. The Philippines economy is an inwards economy falsely kept high by remittances from abroad. This also means when the Dollar declines for those living off American funds that they lose on the exchange rate yet food and other local expenses have increased as well. Bit of a double whammy. In a normal economy the Philippines would have to balance the books as the Peso would start to fail but due to the flood of foreign money coming in its remained high. How long will the trend keep this way really depends on how many workers the Philippines has abroad.
The other reason being as the Dollar has got tighter I have also noticed people being more cautious with they’re finances. The one thing that many are talking about is Costa Rica and Panama as better locations to live than the Philippines due to more friendly retirement systems as well as a cheaper cost of living. Which on my plate I am looking at India as the next location as I can see India and China riding out the forthcoming storms on the economies. Realistically there is no getting away from the fact the WEST not just the U.S. is not paying its debts, only way I can compare it to something outside of politics that seems to make sense is someone with a shopping addiction called in to meet the bank manager and explaining how they are going to pay more of the growing interest on they’re loans (not the loan itself). At which point if you or I did this to a bank you already know your house and everything else would be reposed and every credit line cut, but this is the problem currently nobody is cutting the expenditure! Raising a cap on debt is not going to make this problem go away if anything we are seeing the next dip in the recession and keeping “things can only get better” mentality may actually see a forced depression as the curbing of imports and paying off Billions in debt isn’t happening.
Which gets to the next point if the Dollar really does crash what will people do? I don’t think there is any easy solutions, the Dollar was at over 52 to the Peso same as Sterling was 98 to the Peso and now we see the Dollar hitting $41 and Sterling sitting at around 69-70. I think we are now in a situation we have never seen before and its not a good one, only hope is when it does go down the pan so does the remittance figures so that it puts the Peso in line with other countries in the region as it should never be as high as it is anyway.