27 Economic Reform and Filipino First
Being late hit by the pandemic, ironically, dealt a much more damaging blow to the nation's economy as trade with other countries and territories were disrupted for a much longer time.
Other nations closed their borders to the Philippines fearing that the flu might re-infect their population.
The fear wasn't unfounded as it seemed at first that the situation in the country would spiral out of control with the rate of infection overwhelming hospitals, and deaths rising in many underdeveloped regions.
The prolonged disruption on international trade hit the economy as industries that relied on exports were forced to shut down, or downsize their operations due to a sudden decrease in demand.
The economic downturn had caused bank runs across the country as people hurried to exchange their money for either gold, or silver as the country still uses a bimetallic standard.
The trade deficit caused by trade disruptions meanwhile also ate at the country's gold and silver reserves as the country still needs to import needed products. This further heightened fears that the economy is headed towards a recession.
In order to arrest the economic crisis, and stabilize the financial system, the government had suspended the bimetallic standard and mandated citizens and everyone visiting the country to exchange their gold and silver to the Piso.
This effectively made the Philippine currency as the only legal tender to be used inside the country.
Since the currency isn't backed by anything other than it's economic output, the government allowed the Piso to depreciate against the world's major currencies like the U.S dollar and Pound Sterling.
Then, anticipating an outflow of gold and silver, the government enforced an embargo of both commodities making it illegal for anyone to take their gold or sliver outside the country.
As the country's currency plunged, the prices of imports went up dramatically, which played well into the governments goals of minimizing imports while they boosted local consumption.
The Filipino First policy, which was enacted soon after the government abandoned the bimetallic standard, was aimed to protect and boost the nation's local industries allowing them to satisfy the needs and wants of the population using local sources.
Making imports expensive, including adding tariffs items that could be sourced locally, is aimed to discourage importation of cheaper goods thus making local prices competitive, at least in theory.
The importation policy, however, heavily affected businesses reliant on imported products and technology. A few were forced to shut down as increasing operating costs slowly ate away at their income.
Export regulations were more lax in order to make it easier for local industries to sell their goods to other nations, but domestic markets were ordered to be prioritized.
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The first year of the implementation saw the economy plunge into a recession as expected. The government attributed this to decrease in investments, declines in export revenue, loss of jobs, and the public's uncertainty on the future of the nation's economy.
In a bid to arrest the recession and put the economy back on track, the government proceeded with it's plans of spending more on projects that has a potential to reap huge returns. This meant that the government will embark on a long journey of deficit spending to create jobs and spur growth.
In order to get the needed funding, the government issued funds that will give fixed returns over a set period of time and took out loans from local banks. They also held talks with the U.S and British governments just in case the government needed to take out loans from their banks.
As many of these plans will only bear fruit in the long term, people saw it as a waste of resources and condemned the government for ignoring the plight of many Filipinos already suffering from various negative effects caused by the Filipino First policy.
In an attempt to quell the unrest, the government then embarked on a massive propaganda and marketing campaign greater than the one used at the start of the Great War.
The authorities announced that the projects will create jobs from the cities to the countryside for years to come and that this will make sure the the country will also be independent economically preventing the West from influencing many aspects of Filipino life.
And in a bid to induce pride and nationalism they announced the country's goal of becoming a regional power by promoting the creation of government owned industries like Industriya Automobil, Industriya Aviones, and Industriya Minerales.
These industries are tasked with accelerating research and development of automobiles, aircraft, and mining equipment to be manufactured and sold locally.
They have also announced partnerships with local companies that are willing to make investments on the projects. These companies, they announced, will also have the rights to produce, and market the products to the public.
Local companies were also given the rights to partner with the military on research and development of armored vehicles and fighter aircraft as well as enhancements to the small arms and artillery currently used by the armed forces.
Many of these companies who risked a lot of their fortunes on these partnerships made their first steps into cementing their positions in many industries like agriculture, brewery, mining, and consumer goods and weapons manufacturing.
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For much of the late 1920s, the country's debt ballooned in order to finance the government's projects, the largest ones being the acceleration of infrastructure development, and improving agriculture output.
The nation slowly crept out of its recession into a period of slow growth which had been mostly fueled by construction and food exports
Protests by the public slowly declined as jobs were created in various areas of the country, mostly related to construction, mining, and manufacturing.
Many affected sectors slowly recovered, with exporters slowly recovering the market share they lost due to the trade embargo imposed on the country.
Downsizing also helped other businesses stay afloat and recover as the domestic market boomed due to increased government spending.
By the turn of the decade however, the country's economic recovery stalled as the U.S faced an economic disaster. The economic crisis affected much of the world's economies, including that of the Philippines, which is still reeling from the effects of the pandemic and the policies the government had implemented.
The economic decline of much of the world lowered demand for Philippine goods abroad to less than a quarter of its original, with demand for some products collapsing. Even exports to other Asian nations, and the Asian territories of the West fell by a huge margin causing the performance of the exporting sectors to fall sharply as orders from abroad dried up.
Philippine economic growth once again entered into the negative territory, contracting by as much as 8%.
Nevertheless, the economic depression that started in the United States didn't hit the economy as severely as with other nations.
As the economy is in the middle of transitioning to local production and consumption, and with the deficit spending implemented by the government, trade with other nations accounted for a small percentage of the country's economic output.
Local demand for non-imported products also helped soften the blow to a degree allowing the country to recover much faster than other nations.
The construction boom of the 1920s helped keep the money flowing, thus helping to keep demand stable enough to keep many of the country's businesses running.
The economic hardships brought about by the policies of the 1920s gave rise to Marxist political parties aiming to protect the country's middle and lower classes from being unjustly exploited then abandoned once an economic crisis hit.
Though they were a still a minor group by the mid-1920s, their influence strengthened during the Great Depression as similar movements spread around the world. Along with nationalism, these new political ideologies had taken root and slowly influenced Philippine politics.
