Budget secretary Benjamin Diokno on Wednesday, September 19, said remittances from overseas Filipino workers (OFWs) are expected to keep the Philippine economy steady despite the country’s current account deficit.
In a media briefing, Diokno said that remittances from OFWs continue to increase which stabilizes that decrease in the country’s account deficit mainly due to Duterte’s “Build, Build, Build” program.
“Our current account deficit went down because we are building. We are expanding our economy so that our capacity also increases. We can still rely [on] our OFWs, [the remittances] actually increased. That is still reliable,” Diokno said.
Diokno made the statement after a London-based research firm claimed that Philippine peso will further slide to Php55 against US dollar within the year and to Php58 in 2019.
Diokno said the study is “unfounded” and that its results are “unlikely”
“The fear that our peso to dollar [exchange rate will reach] P58 is totally unfounded. That’s unlikely,” Diokno said.
Diokno added that the forecast will only happen if the tourism sector will also fail due to a viral diseases causing tourists to avoid the country.
“You can always come up with a scenario that nobody will go to the Philippines, like SARS. If so, then nobody will go here. But why scare ourselves? We are in a good shape right now,” he added.
Earlier, London-based firm Capital Economics published a report titled “Peso plunges, Korea’s labor market woes continue” which claimed that peso is seen to continue to weaken due to wider trade deficit, primarily brought by importation of iron and steel shipments for the administration’s “Build, Build, Build” program.
“Looking ahead, the trade deficit is likely to widen further as imports of capital goods continue to flood in to support Duterte’s infrastructure drive,” Capital Economics said.
Moreover, the damages caused by Typhoon Ompong, particularly in the agriculture sector, is also seen to have a temporary impact on the prices of goods in the country.
“The lesson from previous natural disasters is that there is likely to be a short-term negative impact on gross domestic product, followed by a rebound supported by reconstruction efforts. Perhaps a bigger worry from an economic perspective is that ‘Mangkhut’ damages agricultural production, leading to an increase in food prices. This would put further pressure on the Bangko Sentral ng Pilipinas to tighten monetary policy,” Capital Economics said.
