Peso Excels but Economy Remains in Bad Condition

Recent reports show that the Philippine peso is getting stronger but experts also said that it might also be a sign of bad economy.

According to experts, a steep import decline that was supposed to be needed in the Philippines is the cause of the strong peso. The said imports may have been used to maintain the country’s growth trajectory.

“The peso remains the best performing currency in the region in 2020 but the relative strength may actually reflect a fast-fading investment boom,” said Nicholas Mapa, Senior Economist of ING Bank Manila.

Mapa said that the country’s gross domestic product next year will be aided by the “base effect”.

Base effect happens when a slight increase in absolute terms will reflect as large percentage numbers.

Mapa also said that through the years, resurgence to capital formation made the country’s growth remarkable. Only the COVID-19 pandemic knocked out the economy.

Mapa added that import demand and US Dollar demand has “dried up” making the peso a stronger one. (MLC)