MANILA: Trade and Industry Secretary, Gregory L. Domingo, said that growth of Philippines’ exports is likely to see slow on strong peso against euro, Yuan and US dollar.
“Maybe there will be some impact on our exports growth. Growth expectation may be slower than initially anticipated because of severe depreciation of yen and euro,” Domingo said at “A Gathering of Industry Champions” in Makati. Exports growth projection this year has been set at 10 percent.
The peso has appreciated by 20 percent against the yen over the past 12 months and against euro by 35 percent in the past 6 months, Domingo said.
The peso has also slightly appreciated against the US dollar. On Friday, the peso is at P44.25 against the US greenback.
But the US dollar has also strengthened against the euro and yen.
The yen to dollar came to as low as 76 now from only 110-122 last year. But the euro suffered the most severe depreciation against the US dollar from 133 to 135 six months ago, it is now 106.
The strengthening of the peso would render the country’s exports more expensive and therefore less competitive than other competing products.
This could squeeze profit margin so if this cannot be overcome by the differential from cheaper fuel prices, exporters will be forced to raise prices,” he added.
Domingo, however, expressed hope that the steep reduction in fuel prices will result in cheaper production cost and eventually more competitive products.
“It is also a blessing that other ASEAN currencies are not depreciating against the US dollar,” Domingo said. Should other ASEAN currencies weaken against the US dollar while the peso is appreciating, they can replace similar imports from Philippines.
A more stable solution, he said, is to go for higher value added products so as to shield the country’s exports from the volatility of the foreign exchange market.
Despite the threat of the strong peso, Domingo said the Philippine economy is positioned for higher growth this year.
Exports should also catch up to make up for the losses from the four day closure of roads in January during the Papal visit.
“But net we will have very good economy this year,” Domingo said citing the above $2,500 per GDP capita income, stable salary and world class skills of Filipino workers.
Thus, Domingo said the crafting of industry roadmaps is important to “plot out a way to achieve a long term sustainable inclusive growth.”
“The value of these roadmaps is more in the process than the output. Roadmaps become important because the opportunities of the Philippines are so great,” he stressed.
Trade and Industry Undersecretary Adrian S. Cristobal Jr., who spearhead the crafting of the various industry roadmaps, said there are already 32 roadmaps now while 22 more industries want to submit their own development blueprints.
