The Philippine Economy

The Philippines is considered to be a third world country. It pales in contrast to Asian Heavyweights such as Japan, China, Taiwan, and South Korea in terms of economic strength in the world market. It was not always this way however. In the late 1950’s to the late 1970’s, the Philippines was a major economic player in Asia, alongside Japan. Even during the time of the Marcos Regime and Martial Law, the economy of the Philippines was formidable. In the early 1980’s however, despite the overthrowing of Marcos, the economic strength of the Philippines began to falter. In the 1990’s, even before the Asian Economic Crisis, the Philippines was already experiencing massive economic failure. When the Asian Economic Crisis came, the Philippine Economy was hit hard. It was like a boxer being hit with a knockout punch while still laying in the canvass. The Philippine Peso dropped from 26 Pesos a dollar to 40 Pesos a dollar. With the ever increasing instability in Philippine politics, the Philippine Peso hit rock bottom in the year 2000, trading at a miserable 55 Pesos to a dollar. It will take more or less 5 years to see any significant recovery.

This may sound strange, but the weak Peso is welcomed by most Filipinos. This is because most middle class Filipinos rely on money sent to the Philippines from relatives who are working as Overseas Contract Workers in other countries. Since OCW’s get their pay in US dollar currency, this means that a weak Peso would actually give more spending power to the OCW remittances. The Export industry also loved the weak Peso since they can earn more money at a higher Peso per Dollar rate. Most Filipinos never experience any significant change when the Peso is strong. Local employment is also almost unaffected by the Peso-Dollar exchange rate so they don’t really care.