China`s Slowdown and Philippine Growth (Part 1)
Various economic sectors are worried that the ongoing slowdown of the Chinese economy may negatively impact on them. Add to this dampener on global economic growth of the very low oil prices. How will these global developments affect Philippine economic prospects as the Philippines moves to a new political era under the newly elected Administration that will be in place by June 30, 2016?
First, let us understand what is happening to the Chinese economy. As explained by a top Spanish economist from the IESE Business School, Juan Jose Toribio, in the January 2016 International Economic Overview of IESE, the 2008-2009 global financial meltdown triggered a collapse in global demand and a considerable contraction in the exports on which China’s spectacular economic development had grown to depend. The reaction of the Chinese government was to focus instead on the construction of massive infrastructure and real estate projects, as well as maintaining, at all cost, the levels of investment of state-owned enterprises (SOEs). All these were financed by massive flows of credit provided by both the official and shadow banking institutions.