MANILA -- The Development Budget Coordination Committee (DBCC) remains optimistic that the projected seven to eight percent medium-term economic growth for the country is still attainable.
The Duterte administration’s economic managers remain positive that the gross domestic product (GDP) will increase despite the depreciating Philippine peso, falling stock exchange index, widening deficit due to higher imports, and inflation pressures.
In a press conference following the 173rd DBCC Meeting Monday, Department of Finance (DOF) Secretary Carlos Dominguez III debunked the claims that the depreciation of peso and weakening stock exchange translate to an economic slowdown.
Dominguez stressed the DOF's position that the weakest performing currencies in Asia came from countries which had the fastest growing economies in the world -- India and the Philippines.
In the DOF Economic Bulletin last week, it noted that Indian rupee depreciated by 7.46 percent while Philippine peso weakened by 7.42 percent at end-June 2018.
But GDP growth of India and the Philippines in the first quarter of 2018 expanded by 7.7 percent and 6.8 percent, respectively.
For Department of Budget and Management (DBM) Secretary Benjamin Diokno, he opted to call the PHP53:USD1 exchange rate as a competitive rate rather than a weakening of local currency.
Diokno said about half of the population is benefiting from the competitive exchange rate, as the higher peso-dollar exchange rate means increased value of overseas Filipino workers’ remittances.
“About 50 million Filipinos are benefiting from the ‘weak currency’,” the DBM chief mentioned.
The current foreign exchange rate is also an advantage to the export industry, as this would be a potential for export expansion, according to Diokno.
Revenues of business process outsourcing (BPO) companies in peso terms are likely to increase from the competitive exchange rate, the official added.
Diokno mentioned that even the government benefits from peso depreciation.
“We benefit from the ‘weak currency’. Our collection from imports increases,” he pointed out.
He added that for every peso depreciation, the country reduces deficit by PHP7 billion.
Moreover, Dominguez said he does not believe that the drop in the Philippine Stock Exchange index (PSEi) reflects a slowdown of the economy.
He mentioned that despite the decline in the composite index, economists still forecast 6 percent to 7 percent GDP growth for the country.
Moreover, the finance chief has seen the widening trade deficit brought by increased imports of capital goods as an investment for the future.
The rising foreign direct investments (FDIs) proves that investors remain confident with the Philippine economy, the economic managers noted. (PNA)
