THE peso’s drop to P60.10 against the United States dollar has good and bad effects on the manufacturing sector, the Federation of Philippine Industries (FPI) said on Friday.
“A weaker currency can boost exporters by increasing the peso value of foreign revenues. However, for those which rely on imports, higher costs offset part of this advantage, tempering overall gains in competitiveness,” FPI Chairman Elizabeth Lee said in a statement.
Manufacturers in the domestic market face a more direct impact on foreign exchange movements, she added.
Higher costs of imported fuel and raw materials raise production expenses, creating pressures that may gradually be reflected in consumer prices.
“Over time, these dynamics could shape inflation trends and weigh on household purchasing power. Small- and medium-sized enterprises, with more limited capacity to manage currency volatility, remain especially sensitive to these shifts,” Lee explained.
While some exporters may gain from the devalued peso, reliance on imported inputs limits the benefits. At the same time, sustained cost pressures on import-dependent sectors could weigh on consumption and investment, though temporarily, Lee added.
The outlook will depend in part on how long the war in the Middle East will take, particularly their impact on global oil prices and shipping costs.
But mitigating measures are under way, including calibrated monetary policy to control inflation, ensure energy security and diversify energy supply. These interventions will be critical in cushioning cost pressures and supporting domestic demand amid the war in Iran, Lee said.
No job cuts
At the FPI 2.0 Forum on Thursday, Lee told reporters that manufacturers and businesses do not see job cuts despite the increasing costs from the Middle East conflict.
“We’re not letting go of people. It’s not like, if there is a spike in oil prices, you’re going to shut down your factory,” Lee said.
Manufacturing maintains operations and absorbs rising costs through existing inventories and long-term production cycles, she noted.
“We have no choice but to tighten our belts,” she added, saying that companies are studying ways to conserve electricity and fuel, such as carpooling and reducing business-related travels, as well as shortening workweeks.
“There are some [firms] that would do, let’s say, four days or five days. Some factories are actually [operating] six days a week, so [they] could lessen the number of days per week,” Lee said.
