more arguments against a philippine recession

I was just arguing yesterday that I am certain that the Philippines will not be dragged into a recession in the hypothetical event that the U.S. suffers one.

This mornings inquirer included an article by Cielito E. Habito Saying just that. His article is entitled: "Will we import a US recession?"

The short of it was: no, we won't. His definition of a recession was similar to what Ron Nathan used in his article last January 22, entitled American idle referring to two succeeding quarters of negative GDP.

Mr. Habito's main argument is that the U.S. isn't as great a buyer of Philippine exports as before. In his very words: "the US has already been dislodged as our largest export market, whose 17 percent share of our exports is now just second to China-Hong Kong's 23 percent."

My reservations:

Our main consumers of export probably have substantial exports to America as well. Any slow down in their exports to America may in turn reduce their imports from us. By noting how much less we export directly to the U.S., we miss what indirectly ends up there. Not only that, even if there is no chain, lower income from exports in those countries can affect how much they import. Hence, I would reserve from using this sole argument to counter the thought of a possible recession in the Philippines so I'm really interested on Mr. Habito's follow up. (which he promised)


Examining his argument more closely Mr. Habito looked deeper, particularly into the electronics, minerals, woodcraft and merchandise exports.

Exports were distributed as follows:

US 14%
China-Hongkong - 23%
Japan - 15%
Western Europe - 14%
Singapore - 8%
Malaysia - 8%

The greatest red flag that was raised by Mr. Habito was that 79% of our garments are taken up by the U.S. He said that the impact will not be as pronounced as it seems since merchandise exports account for only about a third of our total GDP. But there's no denying the merchandise will be hurt.