LEGAZPI CITY, Nov. 3 (PNA) -- The country’s economic growth has continued despite the weakening of the Philippine peso against the US dollar, which was allegedly triggered by President Rodrigo Duterte’s outbursts against the United States, Albay second district Rep. Joey Salceda said Thursday.
Asked to comment on a report that the Philippine currency rate could possibly fall to P50 to a dollar next year due to the government’s failure to sustain a good relationship with its trading partners, Salceda said the economic impact is a global phenomenon related to the anticipation of a US Federal interest increase.
The report said “the last time the Philippine peso neared P50 to the dollar was when the global financial system was melting down and the Central Bank raised interests to defend it. This time, it has been driven by the President’s cursing of his trading partners and his finance chief accepting the declines.”
There was little change in the Philippine currency from Friday at P48.43 per dollar, added the report.
“Local markets were shut Monday and Tuesday for the holidays. The peso has weakened from a seven-month high of P45.85 on June 9 before Duterte started his six-year term,” said the report.
Salceda, one of the country’s leading economists, was quick to defend President Duterte and in dismissing allegations that the peso has weakened due to the President’s tirades against his trading partners, specifically the US.
The Albay lawmaker said it would be unfair to put the blame on Duterte’s cursing of US President Barack Obama and announcing a “separation” from US during a recent official visit to China.
Salceda said the weakening of the peso against the dollar may be attributed to “a global phenomenon in all emerging markets anticipating a US Federal reserve hike.”
He said the US Federal reserve increase would not only affect the Philippine market but other countries as well, specifically citing Mexico as the “worst to be affected.”
Salceda said to cushion the economic impact of such rate increase the President and his economic managers have recently expanded to two major markets, such as “China for $ 24 billion in investments followed by Japan with $ 25 billion worth of investments.”
He said the business and trade investment packages entered into by the Philippines with China and Japan would serve as a “rebalancing” move.
Salceda said a “market diversified economy should reduce our risk profile for annoying the US policy apparatus.”
He said the economic stimulus that could help hasten and attain a 6 to 8 percent growth rate is higher infrastructure spending, which should be from 5 to 6 percent of the gross domestic product (GDP).
Salceda described this kind of stimulus as “more of execution or absorptive capacity than fiscal capacity.”
He also suggested keeping the macroeconomics stable by maintaining inflation within 2 to 4 percent, that would include a monetary policy from the Bangko Sentral ng Pilipinas “to sustain interest rate within the corridor while government deficit should be beneath 3 percent of the GDP.”
Salceda said the fiscal reforms are needed to step up Customs collections with “incremental taxes at 1.6 percent of GDP.”
“Solving the traffic and congestion would perk up the economy as this problem eats up 2.8 percent of GDP,” he said.
Salceda is hopeful that the country’s economic road map will focus on agriculture modernization, which has been posting a negative trend for nearly three years now, while “sustaining the growth of industry at 6.9 percent, services at 8.4 percent, and allowing a resurgence in manufacturing to bring in 42 industries.”
“The ongoing peace negotiations between the government and the National Democratic Front, Moro Islamic Liberation Front and Moro National Liberation Front will also serve as a strong economic stimulus to make the country an investment-friendly hub among developing countries,” he said. (PNA) LAP/GVR/MSA/EDS