Strong Q3 GDP boosts Peso.

The Philippine peso has been on a rollercoaster ride in recent months, but the latest economic data has given it a much-needed boost. The country’s gross domestic product (GDP) grew by 7.1% in the third quarter of 2021, beating expectations and signaling a strong recovery from the pandemic-induced recession.

The peso, which had been trading at around 50 to the US dollar earlier this year, has since weakened to around 51.50 due to concerns over rising inflation and the impact of the Delta variant on the economy. However, the strong GDP figures have helped to restore investor confidence and push the peso back up to around 51.

The GDP growth was driven by a rebound in consumer spending, which accounts for around 70% of the economy. The easing of lockdown restrictions and the rollout of vaccines have helped to boost consumer confidence and stimulate demand for goods and services. The government’s infrastructure spending program has also contributed to the growth, with construction activity picking up pace.

The strong GDP figures have also been welcomed by the central bank, which has been grappling with rising inflation and a weakening peso. The Bangko Sentral ng Pilipinas (BSP) has raised interest rates twice this year to curb inflation, but the latest data suggests that the economy is growing at a healthy pace and may not need further tightening.

The BSP has also been intervening in the foreign exchange market to support the peso, which has been under pressure from a widening trade deficit and a strong US dollar. The central bank has been selling dollars and buying pesos to boost the local currency, but the impact has been limited due to the large volume of dollar inflows from remittances and foreign investments.

Despite the challenges, the Philippine economy is expected to continue growing in the coming months, driven by strong domestic demand and a recovery in global trade. The government’s ambitious infrastructure program, known as “Build, Build, Build,” is also expected to create jobs and boost economic activity.

In conclusion, the strong Q3 GDP figures have given the Philippine peso a much-needed boost and restored investor confidence in the economy. While there are still challenges ahead, the outlook for the Philippine economy remains positive, and the peso is likely to remain resilient in the face of external pressures.