Sunday, August 7, 2011

The Impact of United State’s credit rating downgrade on the Philippine economy

Standard and Poor's (S&P) downgraded the U.S. credit rating from triple A to double A-plus. S&P cut the AAA rating that it had given to the United States since l941 over concerns about the U.S. government's budget deficit and rising debt problem.
Since, the United States is the country's biggest trading partner and leading source of foreign investments, the impact of the downgrade on Philippine economy is "serious," because it would result in lower exports, slower inflow of remittances from overseas Filipino workers, and reduced foreign direct investments (FDIs). According to Prof. Benjamin Diokno, former budget secretary, the downgrade will also affect the public private partnership (PPP) program, the centerpiece of the economic policy of the administration of President Benigno Aquino III.

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