THE Philippines needs to make its export sector more competitive to ease pressure on the peso and strengthen its ability to finance its growing import bill, Socioeconomic Planning Secretary Arsenio M. Balisacan said.
Balisacan said the government needs to address structural constraints that have kept exports from keeping pace with imports, which has left the country vulnerable to peso depreciation.
‘What we are telegraphing is that we are addressing those structural issues that are constraining our ability to drive exports, to make our export sector more competitive so that we could finance our imports successfully,’ Balisacan told reporters in a chance interview.
He said this would require diversifying the country’s sources of growth, particularly by developing its manufacturing and export industries.
‘We should be able to develop our industries, our exports, making our industries more competitive . . . there’s no shortcut on that. We have to understand where does the weak competitiveness come from,’ Balisacan said.
His remarks came after the peso fell to a new record low of P62.50 per US dollar last Tuesday, its fourth consecutive record-low close.
Balisacan said the country’s dependence on imports means it needs to generate more dollars through exports to finance its purchases abroad.
‘You’re a net importer and therefore you need more dollars, more currency to finance your imports than the currency that you’re able to earn from your exports,’ he said.
Data from the Philippine Statistics Authority showed that import payments rose 18.9 percent year-on-year to $92.26 billion from January to July, while exports grew 12.9 percent to $54.92 billion.
The faster growth in imports left the country with a $37.34 billion trade deficit during the seven-month period.
Balisacan said the imbalance, combined with heightened external uncertainty, particularly from the conflict in the Middle East, leaves the Philippines ‘a bit vulnerable’ to external pressures.
This makes fiscal discipline important, he said, as the government seeks to manage domestic demand while addressing the country’s external imbalance.
But the chief economist cautioned that fiscal tightening should not come at the expense of economic growth.
Instead, Balisacan said the government should prioritize spending with the biggest impact on the economy, particularly education, health, social protection, and infrastructure.
‘Hopefully with that combination, we are able to generate the growth we want even as the size of the overall budget for 20227 is not growing as much in the previous years,’ he added.