Latest Stories

Strong peso seen a threat to manufacturing sector


The appreciating peso poses a threat to the recovery of the manufacturing sector and the jobs it generates, private economists said.

The National Statistics Office’s recent report that manufacturing output grew at a faster pace in 2012 (7.2 percent) than the previous year’s rate of 1.1 percent indicated recovery in the sector, Dr. Victor Villegas of the University of Asia and the Pacific said in a text message.

“This is a recovery. It can be sustained at least for another year or two, since government infrastructure spending and private construction of residences will remain robust, and the election spending will provide an additional boost. But the appreciation of the peso constitutes a grave threat to longer term sustainability,” Villegas said.

As for job creation, which is the reason why government aims to encourage expansion in manufacturing, tourism, agribusiness and other labor-intensive sectors, Villegas said massive job creation can be achieved “only by a depreciating peso, not an appreciating one.”

The World Bank estimates the Philippines needs some 3.5 million jobs a year to sustain growth and make it inclusive—much more than the 1 million jobs per year that the government seeks.

Dr. Benjamin Diokno of the UP School of Economics said separately that the biggest threat to Philippine manufacturing was the continuing strength of the peso because it makes exports more costly (less competitive) and encourages imports.

Also, with a still uncertain world economy (recession in Europe and lower-than-normal growth in the United States) plus strained relations with ever-growing China, Diokno said he expected manufacturing to grow at slightly less than 5 percent in 2013. “Slower exports and higher imports have the effect of reducing domestic production,” Diokno said.

Among manufacturing sub-sectors, NSO data said the food manufacturing index grew 14.1 percent in 2012 from its 13.6 percent slump in 2011, suggesting a recovery in food production. The tobacco industry’s slump got worse with a 21.5-percent contraction in 2012 from the 20.5-percent drop in 2011.

Base metals production fell further with a 9.2-percent contraction in 2012 from a drop of 9.7 percent in 2011. Machinery grew by 8.1 percent in 2012 from a sharp fall in 2011 (32.3 percent).

Gainers for the full year included apparel, furniture and transport. Footwear and wearing apparel output expansion accelerated to 91.5 percent in 2012 from 1.7 percent growth in 2011. Furniture and fixtures was up by 54.7 percent in 2012 from 105.6 percent in 2011. The transport sector showed recovery signs with a 26.6-percent growth in 2012 from the 8.4-percent fall in 2011. The index was sharply down by 24.6 percent in December, which may indicate overproduction in earlier months.

Follow Us

Follow us on Facebook Follow on Twitter Follow on Twitter

Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Tags: Business , manufacturing sector , strong peso

  • oh_noh

    an import-oriented, overseas-worker dependent, consumer country having a strong currency?

    cheers to a strong economy – in paper!

  • mynnyx

    maganda yan para umangat naman ang pinas………………..dapat dumami ang trabaho………….para walang magugutom na pilipino basta huwag lang magnanakaw ang mga nakaupo at politiko…………………

  • malek_abdul

    Our government and private economists must formulate a balanced impact on the appreciation of peso so that every Filipino citizen whether OWF/Exporter or non-OFW/Importers would benefit from it.The abrupt appreciation does not translate to the purchasing power of the peso for now. At least it should be gradual appreciation so both sides can adjust and cope up with the trend.

Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94


  • Camilla’s brother dies in US after head injury
  • Luisita farmers storm DAR compound
  • Trillanes, Ejercito confident they are not in Napoles’ list
  • Easterlies to prevail in Luzon, Visayas
  • Lacson eyes P106-B ‘Yolanda’ rehab masterplan
  • Sports

  • Mixers trim Aces; Painters repulse Bolts
  • Donaire junks Garcia as coach, taps father
  • ’Bye Ginebra: No heavy heart this time
  • UAAP board tackles new rules
  • Baguio climb to decide Le Tour de Filipinas
  • Lifestyle

  • Photos explore dynamics of youths’ sexual identity
  • 12th Philippine Food Expo set at the World Trade Center
  • No tourist draw, Malang the croc will remain wild
  • The best flavors of summer in one bite, and more
  • Homemade yogurt, bread blended with pizza, even ramen
  • Entertainment

  • Sony developing live-action Barbie comedy
  • California court won’t review Jackson doctor case
  • Return of ‘Ibong Adarna’
  • Practical Phytos plans his future
  • In love … with acting
  • Business

  • Facebook profits triple as mobile soars
  • Insular Honors Sales Performers at Testimonial Rites
  • Apple increases stock buyback, will split stock
  • Cost-recovery provisions for affected gencos urged
  • This time, BIR goes after florists
  • Technology

  • Top Traits of Digital Marketers
  • No truth to viral no-visa ‘chronicles’
  • ‘Unlimited’ Internet promos not really limitless; lawmakers call for probe
  • Viber releases new design for iPhone, comes to Blackberry 10 for the first time
  • Engineers create a world of difference
  • Opinion

  • Editorial cartoon, April 24, 2014
  • Talking to Janet
  • Respite
  • Bucket list
  • JPII in 1981: walking a tightrope
  • Global Nation

  • Filipinos in Middle East urged to get clearance before returning
  • PH seeks ‘clearer assurance’ from US
  • China and rivals sign naval pact to ease maritime tensions
  • What Went Before: Manila bus hostage crisis
  • Obama arrives in Tokyo, first stop of 4-nation tour
  • Marketplace