Global Financial Ice Age

We are entering a financial ice age, says the International Monetary Fund (IMF). And indications point to two quarters of stagnant, even backward market performance. Two quarters indicate recession, with some countries like China recently says it's growth has stunted and possibly could also face the bleak prospect of a recession. Economic growth has slowed down considerably, a direct consequence of a US recession. Export-oriented and import-dependent countries like the Philippines would also most likely be hit with a global economic slowdown.

Philippine president Gloria Arroyo just asked the Department of Finance and the Bangko Sentral ng Pilipinas to allocate 100 billion pesos as standby crisis fund. This fund would be extended to companies, especially export-oriented ones, who may be hit by a global recession. Yet, I fear that this amount is insufficient to really cover the expected losses of local companies in the event of a full-blown global recession.

Consider--how many billions will be the result of a construction slowdown in the real estate sector? And how will export industries cope with an expected momentary freeze in bank loans and the local credit markets?

Government should all the more look inward and try to find ways to increase consumer spending. That way, increased consumer spending would prevent the Philippine economy from hibernating.