The Philippines revised on Tuesday its foreign exchange assumptions for its 2017 and 2018 macroeconomic targets, taking into consideration a weaker peso against the US dollar. The forex assumption is now 48-50 pesos to the dollar for both 2017 and 2018, from 45-48, said Budget Secretary Benjamin Diokno, speaking to reporters after President Rodrigo Duterte's economic team reviewed macroeconomic targets.
The peso has fallen nearly 6 percent this year, the second worst-performing emerging Asian currency after the yuan, as the dollar jumped on expectations that US President-elect Donald Trump's proposals for infrastructure spending and tax cuts will boost economic growth and inflation. Policymakers have said a weaker peso is not necessarily bad for the economy because it could boost the country's exports and the purchasing power of remittances from Filipinos working and living abroad, a key driver of domestic consumption.
The Philippines is on track to remain one of the fastest-growing economies in the region, thanks to strong domestic demand and higher government spending, which helped shield the economy from global headwinds. Manila kept its 6.5-7.5 percent growth target for next year and 7-8 percent goal in 2018, with the government committed to raise spending on key infrastructure projects.
"There is no compelling reason to change it for now. We expect the same growth drivers and essentially the same risks and uncertainties in the coming years," Economic Planning Secretary Ernesto Pernia told reporters. Diokno said the budget deficit target would remain at 3 percent of GDP from 2017 until the end of President Duterte's term in 2022.
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