Challenges abound for PH economy

Japanese financial giant MUFG Bank Ltd. said the Philippine peso and the economy as a whole could suffer from the controversial flood control scandals, which are seen to break the upward momentum of government spending on water resources and flood mitigation in two decades.

- DERCO ROSAL

"We adjust our Philippine peso forecast profile somewhat weaker, reflecting risks from flood control project corruption issues, but still forecast the United States (US) dollar-peso moving lower over time with other domestic positives remaining in place," MUFG Global Markets Research said in its latest monthly foreign exchange (forex) outlook, published on Wednesday, Oct. 1.

MUFG has projected that the Philippine peso will still fare well against the US dollar in the coming months, noting that the macroeconomic backdrop for the local currency remains "decent."

To recall, the growth of the Philippine economy averaged 5.4 percent in the first half of the year, following a modest uptick to 5.5 percent in the second quarter. Still, this fell short of the downscaled full-year growth target of 5.5 to 6.5 percent.

Headline inflation also hit a five-month high in August, at 1.5 percent, but it remained tame, clocking in below the government's goal of twoto four-percent annual price increases deemed manageable and conducive to economic growth.