MANILA -- Malacañang told the public on Sunday to prepare for a “worst-case scenario” amid the negative impact of the US financial crisis on stock markets elsewhere in the world.

But a former financial adviser of President Macapagal-Arroyo also warned that the much-feared collapse of the country’s own financial system could only happen because of “our own doing.”

“Confidence is the best defense in a market like this,” Corazon Guidote, former presidential consultant for investor relations, told the Philippine Daily Inquirer in a phone interview on Sunday. “The best way is to stay calm and ride the storm.”

Guidote served in the Arroyo administration for four years before quitting ahead of the “Hyatt 10” Cabinet members to return to the private sector in 2005.

She spent 13 years in the stock-brokering business, working with several multinational companies before joining Malacañang and setting up the office for investor relations.

Press Secretary Jesus Dureza said the country would not be entirely insulated from the global financial crunch despite its sound economic fundamentals, particularly in the banking system.

“We have to be ready for a worst-case scenario because whatever we say, our country is part of a global village,” he said in an interview over Radyo ng Bayan. “We will be affected in one way or another so we should be ready for it.”

Guidote said the public should learn from the mistakes of other economies outside of the US that have been suffering from a steady decline in the stock market. She said much of the problem was a result of what she called “I heard” instinct.

“Panic in the market creates rumors,” she said. “It triggers stampede which is what’s happening in the US and Europe now. The emotional contagion which began in the US is now spreading like wildfire across the globe,” she explained.

Guidote feared that if panic hit the Philippines, “the government cannot bail us out because we have no resources.”

She said the local banking system has been fundamentally sound as a result of adjustments made following the Asian financial crisis in 1997. But still, she said it would not survive a bank run triggered by sheer depositor panic.

“If that happens, it will be a self-inflicted wound,” she said. “We will do damage to our own banking system.”

Guidote echoed the good news that the exposure of several local banks in the US stock market was limited and could easily be written off.

“(Mass) withdrawals are the last thing that we should do because they will hurt our banking system,” she said. “Confidence in our own banking sector is critical.

Dureza downplayed the effect of the financial crunch in the US on Filipinos working there, noting that many of them were serving in the fields of education and health, which were still largely insulated from the crisis.

“Our workers in the US will not be as badly hit…but we should be ready," he said.

Dureza noted the contingency plan now being drawn up by agencies such as the Departments of Labor and Foreign Affairs to help overseas Filipino workers.

Guidote said OFWs and their remittances were providing a “cushion” for the Philippine economy in the wake of the global financial crisis.