Philippines in total uncertainty

Right now, Philippines is in the center stage of media headlines because of the political crisis that has occurred after allegations against the current president Gloria Arroyo came into the media. The opposition parties have already strongly demanded for her resignation and many people joined protests calling for her resignation. Until now, Gloria Arroyo has shown a defiant stand and she is perhaps in no mood to step down from power. Many of her supporters are behind her and violence can erupt in any day between her supporters and opposition parties. However, this is a business blog and naturally, I am more interested to discuss about economic issues rather than politics. If you like to know more about this political crisis then you can visit some of the links that I have added at the end of this article. In this article, I like to explore the likely effects of the political crisis in the Filipino economy.

If we look at the history of Philippines, then it is clearly visible that the last 25 years have been full of political instability. This instability has really caused a very heavy toll for the people of this country. Philippines is a country with natural resources and it has a high rate of literacy. Thousands of Filipinos live in different parts of the world and they send a very large amount of money to their families living here. In fact, last year they sent around $8 billion to home. This money is crucial for the economy of this country and it had a good contribution in the GDP growth of nearly 6% last year.

Perhaps, the worst result of this political crises will be slowing down of GDP. This year, the government of Philippines will be lucky if they can have GDP growth of 5%. If this political stalemate continues for the next two or three months then the country’s economy will really be in a very bad shape. Until now, supporters of the two sides(both the ruling and opposition parties) have remained calm and no major violence has taken place. However, if violence starts and takes a disastrous shape then obviously business would suffer. It is very difficult to say at this moment whether violence in serious form will take place or not.

Philippines is already falling behind in credit ratings and the budget deficit is keeping the government in an ever comfortable condition. At this point of time, the last thing this country needed was political confrontation.

The links:
http://news.bbc.co.uk/1/hi/business/4692343.stm
http://news.bbc.co.uk/1/hi/business/4677721.stm
http://sg.biz.yahoo.com/050719/15/3tkhx.html
http://news.xinhuanet.com/english/2005-07/19/content_3238547.htm
http://www.iht.com/articles/2005/07/19/asia/web.0719phils.php