MANILA, November 5, 2010 (AFP) – The United States’ latest economic stimulus measures will take a toll on the Philippine economy, especially its beleaguered export sector, government and business leaders said Friday.
They warned that the US Federal Reserve’s decision this week to pour 600 billion dollars into the US economy would cause the local currency to appreciate even further against the US dollar.
“No country in the world can defend its currency or manage this spread forever. It is not just us but even Thailand and Singapore are feeling the pressure,” Philippine President Benigno Aquino told reporters.
Trade Secretary Gregorio Domingo said Philippine exporters were already struggling against an undervalued Chinese currency and that the US move would hurt them even further.
“If it weakens the (US) currency further, it will affect us in terms that our exporters will have a more difficult time exporting products to the United States,” Domingo told a trade forum.
Exporters and foreign direct investment were already being affected by the strong Philippine peso, which has appreciated from 46.43 to the dollar at the start of the year to 42.64 on Friday, he said.
Sergio Ortiz-Luis, head of the Philippine Exporters Confederation, told the trade forum that many local exporters had already downsized or even closed down due to the strong peso.
He said investors in the booming business outsourcing industry had also told him that they would cut their expansion plans or even close down if the peso appreciated further.
Aquino said he had met with the secretaries of finance and economic planning to discuss ways to support exporters and the nine million Filipinos working abroad.
The money overseas workers send home to the Philippines makes up more than 10 percent of the nation’s gross domestic product, according to government data.
Domingo said the government was looking at policy revisions to help exporters but warned the country could not afford export subsidies.
Aquino said that the foreign exchange problem could also provide opportunities.
“You need fewer pesos to buy capital goods that we will need for our infrastructure programme. So this might be a good time to purchase those capital goods,” he told reporters.