EDITORIAL - Slowdown

Though world leaders are reacting with speed and unity to stop the financial crisis, the global economic slowdown is expected to last several months, with the most positive forecast seeing recovery only near the end of the third quarter of 2009.

Among the likely casualties are migrant workers, who could be sent home as businesses shut down or local workers are given preference over foreigners. If Barack Obama becomes the next American president and fulfills his campaign promises, the tax credit he has offered to investors for every job brought back to the United States spells trouble for business process outsourcing in developing countries including the Philippines. 

Any country facing a recession will give priority to ensuring the job security of its own workers. If the global job market contracts, it is not just the outsourcing industry that will be affected but also many other sectors. Trade union groups and the Department of Labor and Employment have separately voiced warnings about possible mass layoffs as the global economic slowdown forces companies to downsize or shut down.

A slowdown in the deployment of overseas Filipino workers combined with the return of OFWs who have been laid off can slow down consumer spending that has helped push Philippine economic growth. A drop in OFW remittances can also weaken the peso. Exporters can take advantage of this weakening – if they can sell more to a world in recession.

Even as governments brace for the slowdown, they are also hard at work preparing for the inevitable revival of the global economy and the ever-present need to be competitive. The Philippines should do the same, making sure the country will not be left behind in the next phase of the competition for job-generating investments. After the 1997 Asian financial crisis, Thailand, which was the hardest hit, surged ahead of the Philippines, which was one of the least affected. This must not be the case in the current financial crisis.