Carlo's Think Pieces

Reflections of a Filipino in the Netherlands

Looking forward to 2008

Posted by butalidnl on 2 January 2008

With the new year, some people make new year’s resolutions while others write up their predictions for the coming year. I am not the type to make resolutions with the new year; so I guess I’ll just have to try my luck with some forecasts for the year which has just started.

The Philippine peso will continue to appreciate vis-a-vis the US dollar.  By November 2008, I expect that the peso:dollar rate will have reached 38:1.  The dollar will continue deteriorating worldwide this year, and the peso’s value will rise in step.

The US will experience an economic recession this year. This is most probably already the case starting this January. However, since the official definition of a recession is two quarters of negative growth, it will only be in July when officials will declare that there is a recession (on the basis of the statistics for the 1st and 2nd quarters of 2008). The disappointing Christmas sales, the housing crisis, the credit crisis, and rising costs for imported goods especially oil, will squeeze consumer spending enough to cause this recession. And depending on how the government responds, it could be either a short or a long recession.

World economic growth will slow, but not go into recession.  In a reversal of the usual case of “the US sneezes, the rest of the world catches a cold”,  2008 will see the “US catching a cold, while the rest of the world will sneeze”. The world economy, with the possible exception of stock markets, is no longer led by the US economy. Countries suffering from the decreased demand for their exports from the US will be able to redirect their trade elsewhere. The US recession will dampen the growth of oil prices, which in turn will help other countries.

Philippine opposition forces will continually try to destabilize, impeach or topple the GMA government; and they will all fail.  The government has grown stable these last couple of years, because of political maneuvers and the positive economic trends. Also, opposition forces are far from united, and will be unable to muster enough forces to seriously threaten the government.

In the US, Hillary Clinton will win the presidential elections. The US recession will be the main issue in the elections, and the democrats are usually favored in times when the economy is the issue. Hillary Clinton will gain the democratic nomination, also due to the economy becoming the main issue.

In the rest of the world, it will be the year of the almost-wars.  First of these would be Kosovo, with its declaration of independence. Serbia will be quite mad about this, and there may be skirmishes at the local level, but no armies will clash on this. The lame-duck US presidency will induce other countries to saber rattling against their neighbours, but these will not reach the scale of large-scale conflict.

Now, we just have to wait till the end of the year to see if any (or all?) of the above forecasts have turned out to be correct.  Happy new year!!

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