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JOURNALOF PHILIPPINEDEVELOPMENT
was attributed to the structural reforms that had already been implemented, including financial sector reforms. The consensus was that the Philippines world be among the first to recover from the regional crisis. The Philippines
posted a respectable,
albeit decelerated
real GDP
growth rate of 5.2 percent by the end of 1997. While the domestic economy slightly contracted in 1998, it fared better relative to the substantial economic contractions in Indonesia, Thailand, and Malaysia. The worst of the regional crisis would seem to be over and the crisis economies are deemed as being on the road to recovery, although full recovery is not expected any time soon (ADB 1999). The Philippine economy is thus expected to grow by around 2-3 percent in 1999, on the back of government pump-priming, the recovery of the agricultural sector from adverse weather effects, and the overall recovery of the region. Any modest recovery, however, will be taking place in the context of a significantly weakened macroeconomy, as the country's fiscal position, investment rate, inflation rate, unemployment rate, and overall sectoral performance took a turn for the worse as a result of the regional financial crisis. The full economic effects of the crisis on the Philippines are still unraveling. But more serious are the social implications of the crisis, which could persist even after the crisis and its direct effects have been resolved. This paper looks at the contagion effects of the Asian crisis on the Philippine economy, the policy responses, and their social implications. In particular, the paper discusses the role of the financial sector in the evolution of the crisis. In the following section, the recent performance of the Philippine economy, the financial sector and the social sector is reviewed in order to better situate the Asian crisis and its contagion effects on the Philippines. The third then looks at the economic and social impacts of the Asian crisis on the Philippines, as well as the government's policy responses. The government's social safety net programs are then discussed in the fourth section. Finally, the fifth section presents and the continuing policy issues.
some conclusions