Gloom, gloom, gloom. Unless you are living in a place that has no way of communicating with the outside world, you are probably concerned for the future… the immediate future.
So what’s going on really? Let’s try to recap. The sub-prime mess has taken a toll on the world’s largest and highly rated financial institutions, bail-outs that doesn’t seem to work, reports of recession for first world countries, reduction of economic growth forecasts for Asia, mass lay-offs, companies closing down, stock markets crashing, talks of debt defaults, and many more. To make matters worse, there were civil & political disturbances in India & Thailand – exciting times indeed. The only good news I can recall of late is the reduction of oil prices and some commodities, what a relief! Unfortunately, we still need to feel the effects of the price reductions as inflation rates are still high as of this writing.
On the local front, we are not as badly hit as some countries but this does not mean we are headed for good times. I recently attended an ADB economic briefing for the American Chamber of Commerce (thanks to the sponsorship of my mentor Edwin Ngo) and let’s just say that macro-economic indicators and forecasts are not too encouraging. To prepare for an economic briefing I will be giving next week, I burned the midnight oil trying to get as much information as I can and as expected, there’s not much good news. The 1997 Asian financial crisis prepared many of our neighbors, including ourselves for the crisis today, thank God for that. However, when the US, Europe and Japan would be in economic recession, who would Asia sell its goods to? Although we trade heavily with our neighbors, most of our finished goods are bought by the first world countries. With a looming recession, one can just imagine a dampened demand for consumption which will severely have an adverse economic impact.
We can’t also be too bullish with our precious OFW remittances. Although it is still growing, we can expect the growth to drastically tone down and a possibility of a reversal of trend when the world economy is at a stand-still. In the Middle-East, majority our our OFWs in that region are in the construction industry; it is expected that construction in that part of the globe (as with anywhere else) will slow down, affecting employment of many our modern-day heroes.
What do we do then? Well, the first order of the day is ‘survival’. We need to survive the onslaught of all these changes. Prudence will be a keyword in the 2009 and we need to embrace that value if we want to survive. We need to prepare. Like going into battle, we have to be prepared for the uncertainties of the times. It is foolish to think that this economic cycle will be quick and it will be over just as fast as it started. Many will agree that these challenging times will not be a short cycle but a really long cycle. Over coffee, Francis Kong told me that this will not be a V shape cycle but a U shape one – meaning a long time in the bottom of the cycle, ouch!
My next article (part 2) will cover on some practical tips that in my opinion, will help us survive 2009 and beyond. I will, however, leave you with one very helpful advice that we should all keep to our heart: Do Not Worry. Worrying will only aggravate your condition and will make you act against logic and even common sense. Like always, I look to the Book of Life for wisdom, especially in trying times and was appeased by Matthew 6:27 – “Who of you by worrying can add a single hour to his life?”.
Keep the faith and catch Part 2 soon!
* J. Randell Tiongson is Personal Finance Coach & Educator and the President and COO of Personal Finance Advisers Philippines Corporation. He is a director of the Registered Financial Planning Institute Philippines and has been engaged in the various facets of the Financial Services Industry for two decades. He is also the co-founder of www.income-tacts.com, an inter-active site dedicated to the financial literacy of every Pinoy. For inquiries on training, speaking engagements financial planning and consultancy, you may send an e-mail to randellt@gmail.com.
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