By Revin Mikhael D. Ochave, Reporter
THE SEMICONDUCTOR and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) is confident of reaching its 10% export growth target this year, amid the continued weakness of the peso against the US dollar.
“The Philippine electronics (sector) can meet its 10% growth projection,” SEIPI President Danilo C. Lachica said via Viber.
“We projected a 10% growth this year and as of June year to date, we recorded about $22.6 billion (in exports), and at this rate, we will exceed the 2021 numbers.”
In 2021, the industry reported $45.6 billion in exports, which he said was already higher than pre-pandemic numbers.
The weaker peso is benefiting exporters, particularly those in the semiconductor and electronics industry, Mr. Lachica said.
The Philippine peso on Wednesday closed at a record low of P57.135 versus the greenback.
“We used to see about 1.5-2% increase in sales. Now at the rate that we’re seeing today, this may jump to about 4-5%, so it is beneficial for the exporters but then again, it’s not so good for our local consumers,” Mr. Lachica said in an interview with BusinessWorld Live on One News channel.
Mr. Lachica noted the semiconductor and electronics industry has been affected by supply chain disruptions, the Russia-Ukraine war, volatile oil prices and elevated inflation this year.
“But as long as the peso continues to decline, it really is favorable for the exporters,” he added.
The peso depreciation will likely stoke inflation, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.
“For net importing countries (such as the Philippines), weaker local currencies would tend to increase the import costs/prices and overall inflation. Weaker peso exchange rate also increases the peso equivalent of the foreign debts of the government, some businesses, and other borrowers in US dollars or foreign currency, thereby potentially increasing the country’s debt stock,” he said in a Viber message.
The weaker peso might add to inflationary pressures, increasing the price of imported oil and other commodities, he added.
Inflation slowed to 6.3% in August from 6.4% in July, but economic managers expect elevated inflation for the rest of the year.
Foundation for Economic Freedom President Calixto V. Chikiamco said exporters, industries with high domestic input like agriculture, tourism, business process outsourcing firms, and overseas Filipino workers will benefit from the weaker peso.
“It is hard to say when consumers will feel the impact (of the peso’s decline) because imports from countries with weakening currencies like Japan and the euro won’t be affected. The weakening peso should affect our oil imports but oil prices have been going up and down,” he said.
“The weakening peso, however, will negatively affect our food imports and therefore, there will be cost-push food inflation considering also that there is currently a food shortage,” he added.