ASEAN nations are known to promote de-dollarization. With the ten bloc nations coming together, derailing the US dollar and finding a common currency seems to be their biggest priority at the moment.
ASEAN nations are also working together to create an independent currency system that rivals the US dollar to promote the aforementioned ordeal. But will these nations be able to indeed survive without the strong backup that the USD holistically provides?
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ASEAN Nation Philippines To Suffer Gravely If US Dollar Derails
The Philippines is one of the most noteworthy countries within the ASEAN nations. It is known to attract many US remittances, typically denominated in US dollars. If the wave of de-dollarization sweeps the Philippines, it could significantly impact its remittance flow and foreign exchange earnings, tanking them both to new depths.
Impact on ASEAN Member’s Remittances and GDP
Per a recent report by the Asian Development Bank, the Philippines is one of the largest recipients of remittances, which roughly contribute to 12% of the nation’s GDP.
If de-dollarization happens, it could significantly disturb these metrics, triggering elements such as poverty and unemployment to increase in the nation.
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Employment and Remittance Metrics
The report further outlines how Filipino workers were employed by the US and the Middle East for work purposes, which dramatically helped the nation secure robust remittance metrics.
“Toward the end of 2010, the Philippines will have completed a generation of international migration and remittance experience. In the early years of temporary migration, demand for workers was generally for low-skilled and technical workers. In the early 1970s, the Philippines’s labor export strategy benefited mostly middle- and low-skilled workers sent to the oil-rich countries. Similarly, social patterns in the US and Western countries in generally require a significant number of nurses and caregivers. Thus creating a large demand for them.”
Comprehensive Impact of the US Dollar Derailment on the Philippines
If the Philippines continues trying to avoid using US dollars, it could face serious economic problems. This might include:
- Big changes in the value of the Philippine peso
- The peso becoming worth less than expected
- Rising prices for goods and services (inflation)
These issues could cause significant economic trouble for the country.
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Trade Tensions and Foreign Investment
The nation can also experience trade tensions with international partners if it ditches the USD for trade.
The dollar derailment agenda can also trigger a shift in the mindset of foreign investors. The development can compel them to consider other nations for investment purposes.