Strong peso? PH exporters go for volume

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Exporters target higher export revenue growth despite peso appreciation

MANILA, Philippines – Exporters remain unfazed by the peso appreciation, which traditionally made them uncompetitive in the global market.

Philippine producers are looking at growing the volume of total exports to offset their products’ value, which is dependent on the exchange rate, an official of an industry association told Rappler in an interview Friday, Septembet 14.

Export Development Council (EDC) of the Philippines Co-Chairman Sergio Ortiz-Luis said that while the appreciation of the peso is a concern and that the industry is “watching it closely,” the council is recommending to increase the export growth target to around 13% to 14% every year.

This is higher than the initial estimate of 11% annual growth between 2013 and 2016.

Exports are one of the country’s highest dollar earners, along with remittances. Their performance is key contributor to a better or sluggish overall economic growth in the country.

Unlike remittances, which had remained resilient despite global economic woes, exports have dipped and recovered in the past.

Higher target

Exports reached US$4.807 billion in July, reflecting a 7.8% increase from a year ago.

This is the 7th month of export growth after posting drastic slowdown and negative growth as the economies of and consumer appetite in US and Europe — key export destinations — contracted.

Ortiz-luis said, however, that the country will meet its export growth target this 2012 and the coming years given the recent performance of Philippine export products.

It can be noted that exporters have been undertaking measures to diversify their exports and export destinations. The government is also holding out for hope that some recovery of developed countries next year and in the coming years would take place.

Sergio Ortiz-Luis said raising the growth targets will allow the sector to double annual Philippine export revenues to P120 billion by 2016. However, he said this is not yet final and that the growth target of 9% to 10% this year will stay.

“We would like to see what August looks like before we finalize the figure. Increasing the export targets will allow us to double export revenues by 2016,” Ortiz-Luis said after the EDC meeting on Friday, September 14.

Rising peso

In an interview on Wednesday, September 13, National Economic and Development Authority (Neda) Director General Arsenio Balisacan said the government hopes that the rise in the peso will be temporary since it is only affected by the sluggish growth in developed countries, particularly in the US and Europe.

Balisacan said that, in the meantime, the government expects that consumption, particularly remittance-dependent Filipinos, will slow since the purchasing power of their remittances will shrink due to the strong peso.

Apart from Overseas Filipino Worker (OFW) families, exporters, call centers, and manufacturers of goods that are import dependent, are also expected to experience some slowdown in their purchasing power.

“If that persists we will examine our stand. Intervention is essentially a Bangko Sentral ng Pilipinas [matter],” Balisacan said, referring to the BSP’s role of setting interest rates.  

“We do hope that by next year, as the investments come in, we will see an impovement in the situation. But of course — 41 (to the dollar), we’ve been there before,” Balisacan added.

In 2008, the peso strengthened as a result of higher business process outsourcing investments, OFW remittances, and export revenues. – Rappler.com

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