The continued decrease in oil prices in the world market has brought about some positive results in our local economy. Not only has it slowed our inflation rate, since oil is a major component of production, but it has also maintained the purchasing power of our peso.
In fact, the depressed price of oil in the world market has somehow stabilized the value of the peso against the US dollar. The local economy also benefits because industries big and small depend on petroleum products to fuel their operations. But more than the local benefits that may accrue from the oil price drop, we should be aware and look at the long-term implications of this “positive development” on a wider perspective.
It is quite unanticipated that at this time of the year, the demand for oil remains anemic when business operations in the Western world as well as in Europe, the center of world development, are supposed to be picking up pace. Traditionally, the last quarter of each year is a busy period for all industrialized countries and oil consumption, especially in the West, rises steeply. Such situation would normally lead to price increases but the current situation seems to display a contrary trend.
Though our local economy may be benefitting from this lull in oil prices, the real consequence of such an event is threatening, if not outright scary, to the global scenario. This situation could lead to some form of economic woe like a protracted recession or stagflation arising from an industrial slowdown. Such a phenomenon inevitably affects the rest of the world because the U.S. and the European community account for the bulk of global business operations. This economic malady creates a domino effect on the rest of the world.
A phenomenon like this creates dangerous developments that could be beyond resolve in the short run and could even create political problems. One country cannot bank on the benefits amassed by the downfall of another because its long-run effect will likewise be catastrophic to other countries. Imagine world trade grinding to a halt, with many nations experiencing recession simultaneously. The recent economic meltdown several years back that started in the U.S. and reverberated in the European regions created an economic catastrophe that dealt some “collateral damage” to other regions as well.
At this point in our history where technology is advancing faster than people could ever imagine, leaders and economic policy makers should adhere to genuine cooperation that real globalization brings. Countries should set aside political and economic interest for the common good. Globalization should not be used as a tool to widen political and economic interest but rather as an avenue to promote the benefit of the common good. We should adhere to that age-old adage that we all live in a community of nations, where one’s interest is the interest of all.
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