The peso may weaken to as low as 52 to a dollar this year with the expected slowdown in dollar remittances from Filipinos abroad, according to a recent report on the Philippines by economist Bernie Villegas.
Villegas said that for 2009, the yearend peso-dollar exchange rate could hit a range of 48 to 52:$1 as the global financial turmoil takes a toll on the economy.
His forecast for the peso-dollar exchange rate is less optimistic than that of the official projection of the government.
For 2009, the Development Budget Coordinating Committee (DBCC) expects the peso to end at a range of 45 to 48 against the dollar, revised from an earlier projection of 42 to 45:$1.
With the global financial meltdown, Villegas said Filipinos abroad may be tightening their belts and sending less dollars to their relatives in the country.
Villegas said the weakening peso, along with a slowdown in consumer spending and exports, higher government deficit and a high though slowing inflation rate are major threats to the economy this year.
On the other hand, he said there are still opportunities for the Philippine economy such as demand for Filipinos abroad in other markets, continuous influx of East Asian tourists and expansion in mining and energy investments by private firms.
Furthermore, Villegas said the economy is also expected to benefit from the government’s pump-priming activities, an expansion in low and medium costs housing and office buildings, an increase in demand for business process outsourcing services and the growth of the medical tourism industry.
In terms of economic growth, Villegas expects the economy to grow anywhere from 3.8 percent to 4.5 percent this year, slower than the higher-end of the government’s economic growth projection for the year of 3.7 percent to 4.7 percent.
The National Economic and Development Authority (NEDA) has recently reported that gross domestic product (GDP) grew by 4.6 percent last year, a drastic slowdown from a 30-year high of 7.2 percent recorded in 2007.
The 4.6 percent growth for 2008 is within the DBCC’s revised economic growth assumption of 4.1 percent to 4.8 percent for last year and slightly above the NEDA’s initial estimate of 4.2 percent to 4.5 percent.–Iris C. Gonzales, Philippine Star