Monday, October 13, 2008 Economy to slow down ‘but panic won’t help’
MANILA - The Philippine economy may slow down amid the global financial crisis but there is no chance of a crash, an official said yesterday.
Augusto Santos, deputy director general of the National Economic Development Authority (Neda), appealed for calm as he predicted workers could still get their bonuses this Christmas.
“There is really no cause for panic,” Santos said on ANC television. “The moment that the people panic, that will make the situation worse.”
“We will still have positive economic growth. It will contract but it will not go negative,” he said.
Government is working on a contingency plan for some eight million overseas Filipino workers, whose remittances have propped the economy up.
Last week, economic experts said the country’s economic growth would likely fall to 4.3 percent this year and 4.2 percent in 2009. The Philippine economy grew 7.2 percent last year, the highest in 30 years.
Developing countries warned on Friday that the deepening global financial crisis could dampen growth prospects and recommended a comprehensive international response to prevent “the most difficult situation in years” from deteriorating further.
The Group of 24 noted that some advanced economies are slowing markedly and some already are in recession, and spillover effect could hit their economies.
Excessive
It is essential, they said, to “address deep-rooted weaknesses in risk management and financial sectors in advanced countries that led to excessive risk-taking and speculation.”
The G-24 met Friday before the weekend meetings of the International Monetary Fund (IMF) and the World Bank. The group includes countries from Latin America, Asia and Africa. It groups such regional economic powers as Brazil, India and South Africa. China attends the semiannual meetings as an observer.
“We need to avoid having a domino effect,” said G-24 chairman Jean-Claude Masangu Mulongo, governor of Congo’s central bank. “We need a coordinated effort to address the crisis and not have countries just deal with their own crisis but to look at the effect of their actions on their neighbors.”
Liquidity
The G-24 communique noted several times the crisis originated in advanced countries, which for years have been telling them how to manage their economies, to open their borders to trade and to promote private-sector development.
The ministers said they were worried that financial contagion could spread and result in “reversals of capital flows, increased funding costs and shifts in investor sentiment unrelated to fundamentals.”
To reduce the developing countries’ vulnerability, the IMF and the World Bank need to develop new instruments to help them, the group said. The communique urged the IMF to introduce a new liquidity facility and the World Bank to slash the time it takes to implement development projects.
The IMF, which played a central role in resolving the Asian financial crisis a decade ago, has been largely relegated to the sidelines in the current market turmoil.
But its managing director, Dominique Strauss-Kahn, said Thursday the IMF was “ready to face any demand from any country” needing help, indicating it was ready to resume lending with the “hundreds of billion of dollars” at its disposal. (AP/AFP)
