‘Build, Build, Build’ initiative weakening Philippine peso
As the Philippines has been enjoying a construction boom from the government’s $180-billion “Build, Build, Build” infrastructure campaign, local construction firms have been contributing to an increase in capital goods imports. This has turned the Philippine’s account surplus into a deficit and knocked the peso down to 11-year lows last month. Capital goods imports have risen over 7% to $12.1 billion in the first five months of 2017 compared to last year. The country expects a record deficit of $600 million by the end of the year. Still, the weak peso is generally favourable to the BPO industry as it keeps costs competitive. About $40 billion yearly inflows from OFWs and outsourcing currently covers the trade gap, but would not be enough in over two years. President and COO of Megawide Construction Corp. Edgar Saavedra said that although some of the projects sound ambitious, they are needed.
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