How does political stability influence a country’s ability to recover from a financial crisis?
Answer (1)
Political stability means that a country has a peaceful government, clear leadership, and consistent policies that people and investors can trust. During a financial crisis, political stability is very important because it helps create confidence and ensures that the government can respond quickly and effectively to economic problems.When a country is politically stable, its leaders can focus on creating solutions—such as stimulus programs, job creation, or support for small businesses—without being distracted by protests, sudden changes in leadership, or conflict between government branches. For example, if the president, congress, and economic planners work together smoothly, they can pass important laws to protect jobs or provide aid to families more efficiently.On the other hand, if there is political uncertainty, it becomes harder for the government to take action. Investors become nervous and may pull their money out of the country. Local businesses may delay hiring or investing. This was seen in Indonesia during the 1997 Asian Financial Crisis, where economic troubles led to political protests and the resignation of President Suharto. The unrest delayed the country’s recovery.In the Philippines, stable leadership during times of crisis, like during the 2008 Global Financial Crisis or the COVID-19 pandemic, helped the country manage the situation better. While not perfect, having a functioning government that could implement programs like Bayanihan, provide ayuda (cash aid), and coordinate with the private sector prevented total economic collapse.In short, political stability builds trust. It allows the government to act decisively and gives businesses and citizens the confidence to keep working, spending, and investing. Without stability, even the best economic policies may fail because people lose faith in their leaders.
