The Philippine economy expanded 7.3 percent in the first quarter. In a Bloomberg survey of 15 economists the median forecast was for a 4.4 percent growth. What this tells me is that economists can be totally out of the ball park even as they closely monitor their favorite indicators. What the GDP growth rate affirms is that there is good reason for the Philippine stock market to perform better that the developed markets. Ours is not so small an economy, although we are just half the size of that of Greece’s. However, it is not so small that we need to be so dependent on other economies. It is true that 40 percent of our economy is export oriented, but almost half of those exports are shipped to our neighbors whose economies are even more robust that ourselves.
What this give us is confidence that in spite of the woes in the global markets, we need not be as battered as they are. Personally, I am not that worried about the European situation simply because the sub-prime crisis of 2008 was much larger than this. Spain and Ireland have not yet been threatened wioth default. Banks and investors have just become preemptively cautious. It is not the panic that we saw when the commercial paper and the global inter-bank markets dried up in September 2008 right after Lehman Borthers collapsed. While I see reason for Eurpoean and U.S. financial institutions to be worried, I view it as an impetus for unpopular and tough measures to be take. I am sure that the Germans will be very tough on Greece, and the rest of Eurpoe will take the hard-line on whatever financial support is being mustered.