A slowdown of the US economy could directly impact the Philippines via two key areas: (1) the country’s export receipts; and (2) remittances from overseas Filipinos. The Philippines is not immune to a US slowdown, although there are factors that may limit any adverse impact.
The measurement of economic slack is becoming more difficult. Total potential output – or capacity – is not directly observable and it may be that the increasing flexibility and mobility of labour is causing us to understate our measures of capacity.