Economic Problems of the Philippines Essay

economic problems of the Philippines are very similar to those being battled by former(a) underdeveloped and developing nations. After a long tryst with colonization, the nation is in a flash grappling with change magnitude imports and a assorted economy that is still to stabilize.The Re popular of the Philippines is located in Southeast Asia and Manila is its dandy city. The rustic comprises 7,107 islands and ranks as the 12th most populous state in the world. Like most otherwise southeast Asian regions, the Philippines too has a history of European colonization. It was a colony of Spain and the USA. The country is now home to multiple cultures and traditional ethnicity. It is withal looked upon as a perfect example of a mixed economy. Industrialization is a new development in the Philippines. Traditionally, the economy stabilized on the farming(prenominal) contributions and the manufacture of garments, pharmaceutical products and semiconductors. In the last decade, electro nic exports added to the exports, including various products obtained by mining.The economy of the nation also largely depends on the remittances from Filipinos residing overseas and investing in the homeland. However, exports are not evenly balanced by the imports that include heavy electronics, garments, various raw 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 United States has resulted in the discernment of a mixed economy over a centrally mean or market found one.It is very important 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 first appearance a protracted depression, in 2011, the Philippines faced another economic downturn. The countrys lack of home( a) economic strength delinquent to the absence of core manufacturing sector and an absence of firm and bold domestic help policy initiatives have led the economy to be dependent on the state of the global economy. thereby do it vulnerable to external shocks.Here we try to look at three possible challenges represent to growth and real development of the economy in 2012, based upon the insights provided by the economic policy-making and decisions by the Aquino boldness in 2011.Major Financial Problems of the PhilippinesOver-dependence on Global Economy The growth of the Philippines economy drastically s piteoused to safe 3.6% in the first three quarters of 2011, which is significantly less 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 par to other South-East Asian neighbors. Economic performance figures indicated a contraction in exports and a dro p 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 actually 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 Partnership (TPP). The administration hike 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 go out consequently further the dependence of the economy on the global economy, whereas a regional arrangement between less unequalized Southeast Asian countries is potentially useful. Greater attention has to be paid 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 foreign investors and exporters.Unemploym ent The ordained unemployment figures for the Philippines in 2011 are among the worst in Asia, higher than its South-East Asian neighbors and according to the International turn over Organization the country is among the worst one-fourth in the world in terms of unemployment rates. Without a powerful manufacturing industriousness or real Filipino industry, the economy will be unable to create fair to middling decent paying jobs. Till then manufacturing or services will remain substandard, or of low value-addition. According to employment figures, jobs in the Philippines manufacturing sector change magnitude by just 8% of the total employment. close to three out of every ten people in the labor force are tone 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 erosion of the value of the tokenish wage. Though the Aquin o administration increased the minimum wage and announced cash dole-outs but lack of prize 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 clear an industrialization program that encourages value-addition manufacturing or services and builds Filipino-owned industries.Misplaced Fiscal Austerity Practicing fiscal austerity just to get favorable credit ratings can be counterproductive. The Aquino administration, in 2011, pursued fiscal austerity and worn-out(a) 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 international credit rating agencies Standard and Poors, glums and Fitch upgraded the countrys credit ratings and outlooks. In 2011 the government cut spending on economic services, including infrastructure, in the same vein did not fill in for shortfalls in education, health and admit 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 imply and undermines future 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 role 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, gross domestic product, income and employment and sales. The Aquino pres idency purportedly 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 give greater weight to specialise foreign and domestic elite interests, unfortunately, underscores the challenge of pushing for real reform in 2012.