Reaction Paper (MARCH)

Japan disaster seen to cut local exports, financial aid

MANILA -- The Philippines will have to brace for lower exports and lesser financial aid for infrastructure projects after last week’s massive earthquake and tsunami in Japan, an analyst said Friday.

“The disaster in Japan will be greatly felt by the Philippines, which failed to develop internal economic strength and is unduly reliant on foreign external factors. It is likely that Japanese investments and official development assistance to us will drop or at least slow as Japan tries to reconstruct itself,” Sonny Africa, research head of militant think-thank Ibon Foundation told Sun.Star.

Last year, Japan contributed 36 percent of the estimated $9.7 billion of foreign aid given to the Philippines as President Benigno Aquino III even announced some $2.85 billion worth of Japanese investment pledges in power, transport, and infrastructure.

Philippine exports to the world’s third largest economy might also suffer, affecting local companies involved in manufacturing construction equipment, auto components, and food.

These sub-sectors comprise the bulk of an estimated $7.8 billion worth of Filipino products and services imported by the Japanese in 2010. The figure represents 15 percent of the $52-billion export receipts last year.

Semi-government Export Development Council had targeted exports to grow by only 13 percent in the next three years due to threats to global economic recovery and an appreciating peso, which makes exports more expensive.

“All these will only be aggravated to the extent that the Japanese crisis disrupts the fragile supposed global recovery — shaken already by weak US economy and Middle East troubles,” Africa noted.

On the positive front, Labor Secretary Rosalinda Baldoz had said the Philippines will stand to gain from the latest calamity that hit Japan because of reconstruction efforts there.

Africa however saw the reverse, saying it remains uncertain how far the country will benefit from Japan’s plan to rebuild itself.

“The demand for overseas Filipino workers may drop as the Japanese economy struggles to recover,” he said.

Some 300,000 Filipinos in Japan sent home $883 million in 2010, nearly five percent of the $18.76 b illion total remittances that fuel consumption expenditure in the country.

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After reading the whole article I was not happy because the local exporting of goods to Japan will decrease because of the disaster that happen to Japan which failed to develop internal economic strength and is unduly reliant on foreign external factors. Last year Japan invested power, transport and infrastructure. To what just happen to Japan it would be really suffer the Philippines affecting those local companies involved in manufacturing construction equipment, auto components, and food. Good thing about is the labor secretary just said that the Philippines would stand to gain from the latest calamity because of the construction efforts. This would also affect those Filipino workers and lose their jobs but Japan would rebuild their country after all they are known as the richest country. 

Reaction Paper (FEBRUARY)

Peso down due to global risk aversion 

MANILA, Philippines—The peso fell on the first trading day of the week, mirroring the movement of currencies of other emerging markets, as political tensions in Egypt increased risk aversion globally, traders said.

The local currency closed at 44.27 against the US dollar, down by 17.5 centavos from Friday’s finish of 44.095.

Intraday high reached 44.19:$1, while intraday low settled at 44.35:$1. Volume of trade amounted to $773.55 million, down from $891.22 million previously.

Market players said the depreciation of the peso had to do more with external rather than domestic factors. They said risk aversion rose globally to adversely affect performance of currencies of emerging markets vis-à-vis the US dollar.

They said an uncertain environment usually prompted investors to shift funds into dollar-denominated instruments, considered the most liquid.

The peso dropped despite the government’s report released in the morning that the Philippine economy grew by 7.3 percent in 2010, the fastest pace seen in over 30 years.

Traders said, nonetheless, that the overall outlook on the Philippine economy has been positive and that the peso’s fall would likely be temporary.

REACTION PAPER                                                                           

After reading this article, I felt happy and sad at the same time. As a consumer, I felt happy because as for my own perception, me and my family always go on vacation and when the dollar rate drops we would only pay less for the fare when it was converted into dollar. It was just a while when I felt happy because I was only thinking about my own perception but as to other Filipinos I felt sad because when the dollar drops it would affect the Philippine's economy. Risk aversion means being willing to pay money to avoid playing a risky game, even when the expected value of the game is in your favor. This explains that when the market players said the depreciation of the peso has something to do more with the external factors these external factors would be the political tension in Egypt. Moreover, I am positive that it would only be temporary.

Synthesis- Group 2

                                                                                                                       

A market economy is an economy based on the power of division of labor in which the prices of goods and services are determined in a free price system set by supply and demand. The story started when a couple, James and Jasmine, were dating. They were in areas where different economic situations occur.

            The first scene was shown as James and Jasmine were taking a stroll on the sidewalk, the season back there was summer and it was hot. The two have decided to take a break; they’ve found an icecream booth and a batchoy store, James had thought of having batchoy but because of the weather, they’ve decided to take ice cream instead. On the other other hand, the owner of the batchoy store, Jean, had a hard time selling her stuff while on the ice cream booth which was owned by Joy is having a shortage of stocks due to an increasing number of customers.

            The second scene took place on a restaurant, owned by Joelo and Rose. After having an icecream, they felt that it was not good enough to quench their hunger; they’ve decided to have a lunch on the said restaurant. They’ve made their order and had their meal, after having it, the two had asked for the payment, what they don’t know is that the buffet was excluded from tax and other service charge. They have not anticipated that the bill would be a lot higher than usual. They’ve asked “why” and the manager, Joelo, explained it to them.

            The third scene has taken place on a Mall. There, they’ve found out a very nice place to go. A promo girl, Kim, introduced Eden and Pearl farm as a very good destination. The two had a little confusion on where to go, but because of the discount that they’ve found out, Pearl Farm was a more suitable place. It was also summer back then which was very fitting to go on a beach to have relaxation and fun.

            After having decided to go on to Pearl Farm, the two had to go on buying for swimwear. There, they’ve met the sales lady, Joy, which introduced them to their fine, sophisticated products. On the other hand,James, had a little thought on how swimsuits were made, the flashback was portrayed by Jaycee, Jen and Rose, the three had shown how production of swimsuits were done, its costing and manufacture.

            The scene had ended on the two lovers having a date on the beach. That’s how we portrayed our little Market economy.

Reaction Paper- January

Philippine economy grows at fastest pace in 24 yrs

MANILA, Philippines — The Philippine economy galloped to its highest annual growth in more than two decades, expanding 7.3 percent in 2010 on strong foreign trade and election spending, officials said Monday, forecasting an equally strong expansion this year. Head of the government's statistical board Romulo Virola said the growth surpassed official growth projections of 5 percent to 6 percent. The economy grew only 1.1 percent in 2009, hit by the global financial crisis. The government projected growth of 7 percent to 8 percent for 2011. Virola said expansion in industry supported by growth in the services sector propelled the economy in the first half. Agriculture, which employs four in every 10 Filipinos, also recovered in the last three months of 2010 after four consecutive quarters of decline due to a dry spell. "The domestic economy sizzled to its highest annual GDP growth in the post-Marcos era," Virola said, referring to the 20-year rule of late dictator Ferdinand Marcos that ended with his ouster in 1986. Spending on election campaigns in the May 2010 national polls, increased domestic consumption and investments boosted by the global recovery contributed to the growth, Virola said. The peaceful election of President Benigno Aquino III on the promise to fight corruption and poverty has lifted investor sentiment, he said. Out of the 7.3 percent growth for the whole year, 3.9 percentage points came from industry — mainly food manufacturing and mining — and 3.5 percentage points was contributed by services, including the burgeoning business outsourcing led by call centers. "With the prevailing sanguine outlook of both business and consumers, the economic prospects for 2011 are indeed exciting," Virola said.

REACTION PAPER                                                                                             

When I first read about this news I was happy with outcome of the increase in economic growth in the Philippines. This means that in the past 24 years the economy in the Philippines is increasing and improvements in productivity, which involves producing more goods and services with the same inputs of labor, capital, energy and materials. The strong foreign trade with other countries is good to expand the economy. An increase in GDP of a country greater than population growth is generally taken as an increase in the standard of living of its inhabitants. Good thing I voted the right president of the Philippines which help the economy increase which come from the industry, mainly the food manufacturing and mining. The call center companies are good investment in the economy to boost up more foreign trades with other countries. It is really exciting for the next year what is the outcome in the Philippine economy increasing its economic growth.