Article by:
Joann Villanueva
MANILA – A manufacturing sector executive on Friday said the Philippine peso's depreciation against the US dollar boosts exporters' revenues but also raises the cost of imported materials, underscoring the need for programs to boost productivity and competitiveness.
The local currency weakened further, closing at the 60-level this week amid investor caution due to the ongoing conflict in the Middle East.
In a statement, Elizabeth Lee, chairperson of the Federation of Philippine Industries (FPI), said a weaker peso increases the value of foreign revenues for exporters.
However, she said the currency’s weakness also raises the cost of imported materials, reducing manufacturers’ competitiveness and creating “pressures that may gradually be reflected in consumer prices.”
"Over time, these dynamics could shape inflation trends and weigh on household purchasing power. Small and medium-sized enterprises, with more limited capacity to manage currency volatility, remain especially sensitive to these shifts," she added.
In general, Lee said the economy faces a balancing challenge, noting that while some exporters may benefit, reliance on imported inputs limits the upside.
She also said sustained cost pressures on import-dependent sectors could weigh on consumption and investment, albeit temporarily.
These factors, she added, depend heavily on developments in the Middle East conflict.
"Mitigating measures are underway, including calibrated monetary policy to anchor inflation expectations, and efforts to strengthen energy security and supply diversification," Lee said.
She added "these interventions will be critical in cushioning cost pressures and supporting domestic demand amid external volatility."
"These conditions underscore the need to strengthen domestic industrial capacity, improve supply chain resilience, and manage external risks. Close monitoring of foreign exchange movements, alongside measures to support productivity and competitiveness, will be key to sustaining stable and inclusive growth," she said. (PNA)
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