Economic Outlook Bleak: World Economic Turmoil Within 18 Months to 24 Months

Globalization brings advantages as well as challenges to worldwide economies. According to Dr Bernie Villegas, renowned economist in the Philippines, he foresees a slowdown in trade and industrial activities in most parts of the world causing reduction in Gross Domestic Product in most countries. He predicts that recession will set in anywhere from 18-24 months from now. He cited the worsening economic relations between China and the United States, Brexit and European Union, slowdown of Russian economy and other western countries, Japan and South Korea destabilization due to dependence on these giant economies.

Very critical input in his analysis is the aging population of Japan and South Korea causing them to balance their macroeconomic objectives against social responsibilities toward an elderly population and a declining fertility rate in their respective countries which lead to less productivity.

His bold prediction was that the Philippines will not be affected by the recession. Good news from his proclamation and he stated the following reasons as his rationale:

1. The Philippine economy is not heavily affected by foreign investment and agriculture;

2. The Philippines has the best Central Bank in Asia;

3. The Philippines has a young emerging market;

4. The Philippines has an English speaking population, preferred in international hiring, hence, translating to foreign earnings from overseas workers remittances;

5. The Philippine population is better educated and healthy.

These factors contribute to the resilience of the Philippine economy against recession.

The Philippines must, however, protect itself from negative social behaviors or economic growth dampeners such as low agricultural productivity. Presently, the Philippines is self reliant on food production and therefore, does not have to import food supply for its population. Dr. Villegas enumerated other dampeners:

Obstacles in doing business in the country. The example cited is investment capitalization disparity between foreign investors and Filipinos. This must be reviewed and replaced.

Shortage of technological skill. Philippines must remain in-step with technological advancement.

High frequency of natural calamity. Rehabilitation of disaster areas can be very expensive for government and a tremendous loss for an otherwise productive community.

High rates of electricity increases production cost

Corruption in government

Dr. Villegas stressed positive economic opportunities in the Philippines due to being the fastest rising emerging market, having a younger, highly literate population and a government initiative balancing economic relations between prosperous ASEAN neighbors.