Although currently profitable and well capitalised, many banks will experience income and credit losses, which may trigger a re-assessment by some of them of the suitability of this socalled “originate-and-distribute” business model. With regard to hedge funds, they have not been at the centre of the turmoil.
The net impact of a US downturn on Philippine growth will depend on how the Philippines’ other major trading partners are affected by developments in the US. Remittances are another important channel through which the US economic slowdown could manifest itself in the Philippines. Latest data show that about 1/3 of our land-based workers are in the US.