High interest rates in RP.

[willvill]

I've seen in the media that interest rates in Japan as pegged by their central banks is less than 1% per annum. This extremely low rate is meant to help Japan pull out of its economic downturn. UK too has just 1.5%. US is just a hair higher.

The Philippine Central Bank announced a 1/2 % reduction in their lending rates recently. Is this peanuts? You bet.

My latest commercial loan from my bank, shows I'm charge with 12% p.a. Miles away from the rates in Japan and elsewhere.

Why do we have extremely high interest rates as compared to the developed countries I mentioned above?

Could this high interest be one of the reasons why our economy is lagging down and not growing as fast as we want to?

[Pacis]

Oo nga eh, pero I don't know how governments compute interest rates.

Dito sa US, I just took out a car loan last year, 3 years * 4%pa. Imagine that, compare mo sa 20-30% sa Pinas for 3-4 years na car loan.

[uls]

iba naman sa States eh

they are fighting a recession

more like fighting deflation

kaya the Fed lowered rates to zero

wala naman recession dito sa Pinas

and we just came from double digit inflation last year

nagtaas ng rates ang bangko sentral to fight inflation

di pwede mag lower ng rates sobra dito

hihina sobra ang peso

Japan is also fighting recession, and years of stagnation

the UK is also fighting recession

[CVT]

Sabi ko na nga ba that the Philippines is in a better position these days than these countries....

7303:soda:

[Pacis]

iba naman sa States eh

they are fighting a recession

more like fighting deflation

kaya the Fed lowered rates to zero

wala naman recession dito sa Pinas

and we just came from double digit inflation last year

nagtaas ng rates ang bangko sentral to fight inflation

di pwede mag lower ng rates sobra dito

hihina sobra ang peso

Japan is also fighting recession, and years of stagnation

the UK is also fighting recession

Actually, maraming klase ng rates na inaadjust ang Feds, merong Fed Fund rate, merong Prime rate and Subprime rate.

When I took out the car loan in April 2008, hindi pa maugong ang recession. Today halos doble na ang rates even if you have good credit. Dahil sa recession mas tumaas ang lending rates kasi nabawasan na ang mga gustong magpautang. Everybody wants to be liquid.

IMHO, kaya mataas ang interest rates sa Pinas kasi mas kaunti ang gustong magpautang. Also, mas mataas malamang ang default rate sa mga loans dahil hindi naman well established ang credit checks tulad sa ibang bansa. Dito sa US you just give your SS # alam na nila lahat. Sa Pinas sang damakmak na documents ang kailangan to do a CI.

[uls]

^^^

the Fed started lowering the fed funds rate Sept 2007 in response to the subprime mortgage crisis

by april 2008, the fed had already cut rates a number of times (i'm too lazy now to check the exact number of times, but i'm sure it was more than twice, 3 or 4 times)

and in april 2008, banks are still lending (that's why you were able to get a car loan easily, and at low rates)

the only major casualty at that time was Bear Stearns

there wasnt much panic at that time

try getting a car loan post-Lehman failure (Sept 2008 onwards)

[uls]

Sabi ko na nga ba that the Philippines is in a better position these days than these countries....

7303:soda:

yes the Phils. is actually doing better than other asian countries

we're not experiencing dramatic economic slowdown like what's happening in Japan, Taiwan, China, S.Korea

our economy relies more on domestic consumption

di tulad nila they rely on the consumption of developed countries

yun nga lang our domestic consumption relies on OFW remittances

basta tuloy tuloy ang remittances, we'll be ok

[willvill]

yes the Phils. is actually doing better than other asian countries

we're not experiencing dramatic economic slowdown like what's happening in Japan, Taiwan, China, S.Korea

our economy relies more on domestic consumption

di tulad nila they rely on the consumption of developed countries

yun nga lang our domestic consumption relies on OFW remittances

basta tuloy tuloy ang remittances, we'll be ok

Probably correct but the signs are coming out: ofw's coming home, exports like electronics slowing, lay-off of workers like in Ford Motors, call centers, banks closing...

Hindi pa nag-effect ang global recession ngayun sa atin...baka delayed reaction. I would say the real bad picture for Philip[pine economy will show this first 6 months. ( I'm not an economist though).