The Department of Trade and Industry (DTI) has remained bullish about the growth prospects of the country’s exports, investment inflows and the overall economy throughout the year until 2017, despite the continued weakening of the peso.
“We have a good economic momentum and we’re hoping (the gross domestic product) growth will stay at 7 percent,” Trade Secretary Ramon M. Lopez said on the sidelines of the Manufacturing Summit 2016 on Tuesday.
“We are bullish more than ever, especially on exports. We saw signs of a rebound in September, when exports grew 5 percent. Also, with the exchange rate cooperating, that will help in the growth of the exports sector,” Lopez added.
It can be recalled that merchandise exports bounced back in September to end 17 straight months of year-on-year decline alongside strong growth in imports and manufacturing on the back of recovering global trade ahead of the holiday season.
The weakening of the peso to around 48 to 50 against the US dollar was deemed acceptable, with the current range seen as a boon for exporters and overseas Filipino workers, who will now have more pesos for their dollars.
Some companies, meanwhile, may be adversely affected by a weak peso as imported raw materials have become more expensive.
But the higher demand, brought about by improving purchasing power, was seen to offset the negative impact on the cost of consumer goods.
Competitive pricing
“This range of anywhere between P48 and P50 to a dollar should be good, especially for exports. What we don’t want is a drastic depreciation. We don’t want drastic movement, but (a weak peso) allows for a competitive pricing of export products,” the trade chief explained.
“As I’ve said before, (a weak peso) will encourage dollar earners. OFW families will have stronger spending power. Also, the depreciated currency is like a protection for domestic firms because if imports become more expensive, (Philippine) companies will have better prices for their products in the local market. In effect, it’s like a natural protection for local companies. So I’m not worried for as long as the foreign exchange movements are not drastic,” he added.
Lopez admitted, however, that there would be an inevitable impact on the production cost of companies that use imported raw materials, such as oil.
Last week, the peso touched the 50:$1 level to hit a fresh eight-year low of 49.98 to $1. It was the weakest close since Nov. 20, 2008’s P49.999:$1, at the height of the global financial crisis.