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Economic outlook for 2008 

As the year is about to start, let me indulge you with my own economic analysis for this year.

To start with, let us look at the events in the world's largest economy, the United States of America. The United States is facing a serious economic problem due to the sub prime mortgage crises. This has caused several economic problems including slower jobs growth, shortage of business credit, and a decrease in industrial production. The seriousness of the problem has caused the White house to lower its economic projections for 2008. Economic growth was nil during the past quarter. Perhaps the only good thing that could happen is thatthe United States will not go into a full blown recession and that the sub-prime mortgage problem will be solved by the first half of 2008. The worst thing that could happen to the United States is that it would go into a recession.

What is the impact of this problem to the rest of the world? Exports by other countries to the United States will slow down because of the economic problems they are facing. The positive thing about this is that as the Feds continue to cut interest rates, investors will instead pour their investment into economies that will give them a more attractive return. Strong emerging economies like China and India, which are said to continue to lead the growth in the Asian region are most likely to benefit from this. Most economist say that Europe will not be affected so much by the economic problems of the United States however a slow down in Europe's exports will temper its growth.

It is most likely that oil prices will continue to remain high. Several spikes will continue to be experienced throughout the year due to several factors such as speculation, higher demand, lower supply, limited capacity, geopolitical concerns etc. Last year alone, oil prices rose from $50 per barrel at the begining of the year to a almost a $100 last November. This problem will continue to have an effect on our oil dependant economies. The price of oil hit $100 a barrel for the first time in history during the first week of this year. Africa, considered as an emerging oil producer,will benefit from this situation, although continued violence in some parts of the continent may affect oil production. The Middle East will continue to experience economic growth as oil prices will remain high or continue to push upwards.

On the local scene, the Philippines will continue to lock in to its previous economic gains and will continue to experience strong growth. The economic boom is continued to be fueled by rising foreign investments, more growth in OFW remittances, more growth in the tourism sector and continued growth in exports mainly due to business process outsourcing. However this growth will be much slower considering the slowdown in the U.S economy. The worst case scenario for exports is a flat growth. As more dollars are flowing into the country the Peso will continue to strengthen as expected. It will range somewhere between the P 35 to P 39 level within this year. The stock market is expected to hit the 4000+ level by the middle of this year.

This growth will probably be tempered by rising oil prices and the occasional political mud slinging. The rise in oil prices will make doing business in the country more expensive. This will in turn burden the consumers as they will be paying more for good and services than they are used to. However I do not see that there will be any serious political troubles that will beset the country this year. Most People are sick and tired of asking for the President's resignation. They probably realize that after all we are experiencing growth. Hopefully this growth will continue.

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Are you sure about the investment decisions that you are making ? Visit the blog of Zigfred Diaz. He regularly blogs on several topics including investments and gives an economic forecast that could help in making investment decisions.

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