PH peso expected to stabilize next year; inflation yet to catch up
MANILA - The Philippine peso closed at 55.9 against the dollar on Friday, and for overseas Filipino workers, this may mean higher remittances for their families back home, but rising prices of goods and commodities have offset what would have been gains.
Ronald Ron has worked for 16 years in Kuwait as a mechanic, only coming home to his family in the Philippines every two years, a sacrifice to earn better income abroad.
While the dollar strengthens against the peso, Ron's wife at home still finds the need to budget more strictly, as inflation quickened to 6.1% in June.
"Okay sa amin na maganda ang padala namin, mataas, maganda ang napapadala sa pamilya, pero ang kapalit, 'yung mga bilihin sa Pilipinas. Hindi naman lahat ng Pilipino kaya bumili," Ron said.
(We're happy to be sending back money worth more after being exchanged for pesos, but in turn prices of goods have gone up. Not all Filipinos have the same purchasing power.)
Higher remittances are no cause for celebration they come with higher inflation, especially for OFWs earning lower incomes in countries with lower exchange rates.
"P1,800 ang nadagdag sa palitan, eh ang P1,800 'pag dinala mo sa palengke, parang medyo hindi ka rin naman makakapamili ng marami. 'Yung value kasi niya na-e-erode din, so in the end ang tanong nga nakakasabay ba? Hindi sumasapat ang pagbagsak ng peso para sabihin ng OFWs na makakaagapay sa isinikad naman ng mga bilihin," Eman Villanueva, secretary general of Migrante Hong Kong, told Teleradyo.
(We saw a P1,800 increase in our remittances after the peso weakened, but P1,800 can only go so far in local Philippine markets now. The amount increases but its value erodes. Higher exchange rates are not enough to cover rising prices of goods back home.)
The Development Budget Coordination Committee, which consists of President Ferdinand Marcos Jr.'s newly appointed economic team, said on Friday that the Philippine peso is expected to strengthen against the dollar starting next year.
But lowering the inflation rate will be harder, with projections seeing targets achieved by 2024.
"The PHP to USD exchange rate assumption for 2023-2028 is projected at 51-55 against the USD due to heightened global uncertainty such as aggressive monetary policy tightening, of the US, market aversion of Russia-Ukraine conflict, and increased global oil prices," Department of Budget and Management Secretary Amenah Pangandaman said.
"The average inflation rate assumption for 2022 remains elevated and is projected to range at 4.5-5.5%. It is likely adjusted to 2.5-4.5 for 2023, and is seen to return to the target range fo 2.0-4.0 % on 2024-2028," she added.
The economic team also sees economic growth at 6.5-7.5 percent this year, narrower than previous projections.
Villanueva and Ron's families will have to budget tighter a little longer. But both share the resounding call of over 1 million OFWs to the new administration's economic team to help make their time away from their families worth it.
"Ang pinakamahalaga sa aming OFWs ay bumaba ang presyo ng bilihin sa Pilipinas, kasi 'yan ang magbibigay ng mas malaking value sa kinikita namin sa ibang bansa. 'Pag mura ang bilihin, affordable, lalong nakakaroon ng saysay ang pagtatrabaho, pagtitiis sa labas ng bansa," Villanueva said.
(What's important is prices back home stabilize. When goods are more affordable, our remittances have greater value, it makes our sacrifices away from home have meaning.)