How does consumer spending help in the economic growth?
FACT : The Global economy is now in a crisis. The Philippine economy is greatly affected and the most significant effect of the crisis on the country is the massive loss of jobs.
Just a few days ago, it was in the headlines that INTEL will be closing its assembly test plant in Cavite which employs about 1,800 Filipinos. The company explained that they never anticipated this kind of effect by the economic recession. While an outsourcing firm, Accenture, was said to be laying off around or at least 500 workers in the country, affecting around 3% of the company's workforce. According to one of the articles released in the newspapers, the reason behind this was that they have become overcrowded with people whose projects have been put to hold, canceled, and with those who had no assignments.
I am neither an economist, nor a financial analyst. I am simply a 22-year old student who is very much concerned about what current crisis that our country is facing. I know that a lot of people now are jobless. Some may have stable jobs but their net home pays are only enough to sustain their family needs. Some workers do not even have the enough salary provide for their own or their family's everyday needs. While some, have stable jobs, good pays, and more stable lives.
FACT : Given the issue that our country is in an economic crisis, the tendency of every individual is to save money.
RESULT : less spending = less demands = less production/supply = higher prices = less need for workers = more jobless Filipinos = more saving = decrease in circulation of money = bigger crisis.
OPINION : Based on what I have read from the newspapers, analysis of financial people, and suggestions of business people, SPENDING can help in the growth of our country's economy. It may not be the ONLY solution, but the consistent circulation of money can help sustain a good supply and demand chain. Consumer spending is one of the foundations of any economy's stability. For the consumers, spending does not really mean that you have finish off all the cash that you have. It is important that every individual balances his/her cash flow.
Just a few days ago, it was in the headlines that INTEL will be closing its assembly test plant in Cavite which employs about 1,800 Filipinos. The company explained that they never anticipated this kind of effect by the economic recession. While an outsourcing firm, Accenture, was said to be laying off around or at least 500 workers in the country, affecting around 3% of the company's workforce. According to one of the articles released in the newspapers, the reason behind this was that they have become overcrowded with people whose projects have been put to hold, canceled, and with those who had no assignments.
I am neither an economist, nor a financial analyst. I am simply a 22-year old student who is very much concerned about what current crisis that our country is facing. I know that a lot of people now are jobless. Some may have stable jobs but their net home pays are only enough to sustain their family needs. Some workers do not even have the enough salary provide for their own or their family's everyday needs. While some, have stable jobs, good pays, and more stable lives.
FACT : Given the issue that our country is in an economic crisis, the tendency of every individual is to save money.
RESULT : less spending = less demands = less production/supply = higher prices = less need for workers = more jobless Filipinos = more saving = decrease in circulation of money = bigger crisis.
OPINION : Based on what I have read from the newspapers, analysis of financial people, and suggestions of business people, SPENDING can help in the growth of our country's economy. It may not be the ONLY solution, but the consistent circulation of money can help sustain a good supply and demand chain. Consumer spending is one of the foundations of any economy's stability. For the consumers, spending does not really mean that you have finish off all the cash that you have. It is important that every individual balances his/her cash flow.
"Very adversely! Reduction in consumer spending can bring by a recession.
If people spend less, there will be less demand for goods and services.
With demand, production will be decreased.
When production is decreased, cost-cutting measures will be implemented.
People are laid-off, the economy detracts."
- An answer from Yahoo! Answers
"In the first nine months last year, the Philippine economy grew
by a record seven percent, fueled by strong consumer spending
and the services sector."
- Chino S. Leyco, Manilatimes.net
Overseas workers send home more than US$1 billion a
month to their families in the Philippines.
The bulk of this amount is spent on consumer products.
OFW money has made mall owners among the richest Filipinos today.
Unlike in neighboring countries where economic growth is investment-driven, consumer spending has sustained the Philippine economy.
- Mong Palatino, Bulatlat.com
Nuff Said? So What are your plans for 2009?=)
Oh, I have a Question!!!
How does wage increase contribute to the inability
of companies to continuously pay their workers, thus, job cuts?
answers, opinions, anyone?
=)
If people spend less, there will be less demand for goods and services.
With demand, production will be decreased.
When production is decreased, cost-cutting measures will be implemented.
People are laid-off, the economy detracts."
- An answer from Yahoo! Answers
"In the first nine months last year, the Philippine economy grew
by a record seven percent, fueled by strong consumer spending
and the services sector."
- Chino S. Leyco, Manilatimes.net
Overseas workers send home more than US$1 billion a
month to their families in the Philippines.
The bulk of this amount is spent on consumer products.
OFW money has made mall owners among the richest Filipinos today.
Unlike in neighboring countries where economic growth is investment-driven, consumer spending has sustained the Philippine economy.
- Mong Palatino, Bulatlat.com
Oh, I have a Question!!!
How does wage increase contribute to the inability
of companies to continuously pay their workers, thus, job cuts?
answers, opinions, anyone?
=)
3 comments:
nice point. i also heard this from one of the expert economist but it's also good to see it posted in blogs where people can read and review it.
To : The donG
Thanks for visiting my blog! I blogged about this because a lot of Filipinos are uninformed about this. Thank you for the comment!
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