“Looking ahead, the trade deficit is likely to widen further as imports of capital goods continue to flood in to support Duterte’s infrastructure drive,” Capital Economics said. The increasing capital goods imports due to the infrastructure boom have reversed the country’s current account surplus to a deficit, pressuring the peso. Monthly remittances remain inadequate to finance the monthly trade deficit,” ING Bank senior economist Joey Cuyegkeng said in a commentary. Weak peso contributes to inflationThe weak peso has been contributing to rising domestic inflation, which soared to its highest level in nearly a decade in August. The depreciating local currency has also been pushing up prices for imported capital goods, posing a challenge to Duterte’s multi-trillion peso infrastructure program.

Source: Philippine Star September 18, 2018 04:52 UTC