Despite of economic turbulence worldwide, strength and stability highlighted peso performance in 2014
In December last year, when the oil price fell by more than 40% in comparison to the first semester of 2014, countries hardly hit by the downfall were under the spotlight. Venezuela, Malaysia and especially Russia faced a huge drop of their currencies and had to take actions to prevent a collapse of their economies.
However, much less attention was given to the nations that were actually benefited by those worrying news. A report titled “Oil-ipedia”, released in December by the Research firm Oxford Economics, found out that the Philippines was on top of the list, standing out from the rest of the world. “The Philippines is going to crush it”, also cites Fortune’s website about the result. The fact that the Philippines does not produce oil in relevant quantity and is a big importer of goods due to its island formation were the main reasons for its leading position. Basically, as a nation driven by domestic consumption, the economy will definitely be favored by lower commodity prices.
The consequence was a stable Philippine Peso rate despite of the turmoil spread around the world. During 2014, although the peso did depreciate against US dollar – following a wave of money outflow from emerging markets – , it remained strong compared to other global currencies, such as euro and Japanese yen. Before the holiday break in December, the peso closed at 44.68 per dollar, while in the same period of 2013 it was quoted 44.305, a small range for a year highlighted by the slowdown of Chinese’s economy growth and the US recovery.
Another major reason for the positive outlook of the Philippines’ currency is the relevance of OFW remittances to the economy. The cash sent by the 10.5 million Philippine workers living abroad to their families amounts for almost a huge 10% of the GDP. From January to November 2014, over 24 billion US dollars entered the country through banks from personal remittances, as announced this month by Bangko Sentral Ng Pilipinas, the local Central Bank. Since these remittances come from diverse parts of the world (North America, Asia, Europe and Middle East), it allows the Philippine economy to be less attached to a specific economic context.
Philippines has been seen as one of the most prospective countries to invest in Southeast Asia. Politic and economic stability, allied with a high skilled workforce and cheap costs are attractive factors for multinational companies. With more than 100 companies registered in the Philippines, Triple i has the expertise to assist you in setting up your company in the country.
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