London-based economic research firm projected that Philippine peso will be P58 versus $1 next year because of these reasons.
Philippine peso is predicted to hit P58 vesus $1, according to the London-based economic research firm Capital Economics.
The Philippine currency has hit P55 this year and it is expected to reach up to P58 next year.
Based on the article published in Inquirer, President Rodrigo Duterte’s ambitious infrastructure program will continue to widen the trade-in-goods deficit.
The report from Capital Economics released last September 14 stated that the super typhoon Ompong, with international name Mangkhut, also affected the high prices of commodities.
“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
Filipinos have already felt this problem as prices of basic commodities soared high. In August, rice, fish, meat and vegetables accounting for 2.4 percentage points of the over nine-year high inflation rate of 6.4 percent, according to the report.
Data from the government reported this wider trade deficit:
- $22.49-billion deficit (end of July 2018)
- $13.06-billion deficit (first seven months of 2017)
It has a difference of 72.3-percent. Moreover, imports jumped 15.7 percent year-on-year to $61.23 billion from January to July.
Exports of merchandise, on the other hand, declined 2.8 percent to $38.74 billion.
Last Friday, Banko Sentral ng Pilipinas reported that the current account deficit climbed to $3.1 billion. This is equals to 1.9 percent of GDP.
In 2017, the deficit was $133 million or 0.1 percent of GDP. It was said that the major factor of current account deficit is the Philippine peso’s depreciation, based on the report.
