FMIC sees PHL inflation within average goal this ’17, peso to remain weak vs. USD

First Metro Investment Corp. (FMIC) sees inflation to continue to rise this year at an average of between 2.8 and 3.2 percent.

Rate of price increases in the country averaged at 1.8 percent in 2016, the second consecutive year when inflation failed to meet the government's two to four percent goal until 2020.

FMIC president Rabboni Francis Arjonillo, in a briefing, said the company continued to see strong domestic growth for the Philippines this year, with a projected output of seven to 7.5 percent.

This robust growth, along with the increase in oil prices and weaker peso are seen to push inflation up to within target levels this year.

Strong domestic expansion is also seen to get continued support from inflows of Overseas Filipino Workers' (OFW) remittances, which, in turn, is projected to rise between two and four percent this year.

Cash remittances as of end-October 2016 rose four percent year-on-year to USD22.12 billion, hitting the government's full-year target for the year.

Remittance growth last October was, however, not the first time it hit four percent. It generally posted a four percent and higher growth in most of the months last year except in January when it grew 3.6 percent, 3.2 percent in March, and with a three percent expansion in July.

Meanwhile, the Philippine peso is generally seen to remain weak against the US dollar this year, with the range projected between 50-52.

This is contrary to the local unit's performance in the last two days, with the Thursday finish posting a more than one-month high of 49.46, its strongest since the 49.35 on Nov. 16, 2016.

"The Philippine peso will remain under pressure as the US economy continues to gain traction, leading to the strengthening of the US dollar," FMIC said in a statement.

Relatively, ING Bank Manila, in a research note, expects the peso weakness to continue for most of this year and eyes the peso to end the year at almost 52 level to a greenback.

Source: Philippines News Agency