BUSINESS CYCLE

• PHASES OF A BUSINESS CYCLE

• BUSINESS CYCLE IN THE PHILIPPINES
 WHAT IS BUSINESS CYCLE?
- BUSINESS CYCLE IS A CYCLE OF FLUCTUATIONS IN THE GROSS
DOMESTIC PRODUCT (GDP) AROUND ITS LONG-TERM NATURAL
GROWTH RATE.
 4 PHASES OF BUSINESS CYCLE

1. EXPANSION
2. PEAK/PROSPERITY
3. RECESSION
4. TROUGH/DEPRESSIO
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1. EXPANSION
- IT IS THE GROWING OF THE ECONOMY
- IN THIS PHASE, THERE IS AN INCREASE IN VARIOUS ECONOMIC FACTORS,
SUCH AS PRODUCTION, EMPLOYMENT, OUTPUT, WAGES, PROFITS, DEMAND
AND SUPPLY OF PRODUCTS, AND SALES.

2. PEAK/ PROSPERITY
- PEAK PHASE REFERS TO THE PHASE IN WHICH THE INCREASE IN GROWTH
RATE OF BUSINESS CYCLE ACHIEVES ITS MAXIMUM LIMIT.
3. RECESSION

- IN RECESSION PHASE, ALL THE ECONOMIC FACTORS, SUCH AS

PRODUCTION, PRICES, SAVING AND INVESTMENT, STARTS DECREASING. 

4. TROUGH/DEPRESSION

- IT IS THE TURNING POINT OF RECESSION, OR WHEN THE ECONOMIC

ACTIVITY IS AT ITS LOWEST.
 BUSINESS CYCLE IN THE PHILIPPINES
• IN TODAY’S ADVANCEMENT OF THE PHILIPPINE ECONOMY, IT DOES NOT
FOLLOW A STEADY COURSE OF GOOD BUSINESS CONDITION. IT’S
PERFORMANCE IS HIGHLY CORRELATED WITH THE PERFORMANCE OF OTHER
ECONOMIES DUE TO IT’S OPENNESS TO INTERNATIONAL TRADE.
• TYE MAJOR EXPORT EARNINGS OF THE COUNTRY ARE TIED UP WITH THE U.S,
TAIWAN, SOUTH KOREA, JAPAN AND SOME EUROPEAN COUNTRIES. WHEN
THESE COUNTRIES ENJOY PROSPERITY, IT TRICKLES DOWN TO THE
PHILIPPINE ECONOMY THROUGH MORE HEFTY REVENUES.