Economy will weather peso slide, says legislator

The country’s growth will weather the weakening of the Philippines peso against the US dollar, which was al­legedly triggered by President Duterte’s outbursts against the United States, Rep. Joey Salceda of Albay’s second district, said.

Asked to comment on a report that the Philippines currency rate could possibly fall to P50/$1 next year due to the government’s failure to sustain a good relationship with its trading part­ners, Salceda, a former stock analyst, 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 Philippines 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.”

Salceda, one of the country’s leading economists, defended the President and dismissed al­legations that the peso weakened because of the President’s tirades against his trading partners, spe­cifically the US.

The Albay legislator said it would be unfair to put the blame on Mr. Duterte’s “cursing” of US President Barack Obama (ob­servers said that while the Pres­ident, indeed, cursed, the curse word was not aimed at anybody in particular, least of all the US chief executive) and announcing during his visit to China a “sepa­ration” from US.

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 that 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 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 conges­tion would perk up the economy as this problem eats up 2.8 per­cent of GDP,” he said.

Salceda is hopeful 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.