The economy continues to decline amid the political crisis
The Philippine economy continues to decline amid the intensifying political crisis of the ruling system. Because the Philippine economy is backward and has no basic industries, it is in permanent crisis and easily runs aground due to political convulsions.
Within a month, the value of the peso against the dollar slid from a little more than P46 to a dollar, to more than P50 to a dollar. Even "analysts" now refuse to make forecasts on how much more the peso will decline. In a desperate attempt to stem the peso's fall, the Central Bank has continually raised interest rates in order to attract financial speculators to buy pesos. Banks have raised their lending rates by as much as 18 percentage points, to as high as 35%.
This has had disastrous effects, especially for local small and mediumscale businesses whose production is dependent on imported components. With these businesses' low rates of profit, they easily fold up under the weight of high interest rates. In the past months before the rapid decline of the peso, there has already been a precipitous drop in imports. The closure of Sarao Motors, Inc., one of the more notable assemblers of passenger jeeps, highlights the sharp decline in local production.
Foreign investments dropped by 21.4% in the second quarter from P10.7 billion to P8.44 billion. A further decline is expected in the third quarter, especially after the economy was given negative ratings by foreign banks and financial institutions.
The Philippine stock market is said to be among the five worst performers in the world. Speculators in stocks avoid it like the plague. In a few days, the stock exchange fell by 87 points from 1,373 (October 5) to 1,282 points (October 16).
Government funds have already dried up. As early as September, the government's budget deficit had already soared to P82.982 billion, P35 billion more than the P62.5 billion target for the year. The government estimates that the deficit will reach P110 billion by the end of the year, almost equal to the P111.7 billion deficit in 1999, especially after the IMF refused to release more loans and the Philippine government was unable to meet targets for the sale of public corporations.
The toiling masses suffer the most from the intensification of the economic crisis. Unemployment continues to rise. Based on official government statistics, the rate of unemployment has reached 11%, the highest since 1986. In fact, the number of unemployed is 28 million or more than 56% of the labor force. The P26.50-wage increase ordered by the government is woefully inadequate, way off the P125-wage increase demanded by workers and not enough to enable them to cope with the continued increase in the prices of commodities due to the rising prices of petroleum products. The big oil companies are set to hike oil prices by as much as one peso per liter in the first week of November.
As the political crisis of the ruling system worsens, the economy will continue to go under. Still, even if the current political crisis is resolved, the economic crisis will persist, setting off worse political crises for the ruling system in the future.
| 
