PHL Thriving on Strong Tourism, Stable Peso
It looks like we have an auspicious beginning in 2020. Another positive economic data has emerged in December that points to a much stronger economy this year.
More foreign travelers are coming to the Philippines, lured by the country’s improving economy and unique natural attractions. The money they bring with them helps boost the domestic economy and support the strength of the peso.
The peso is one of the most resilient Asian currencies last year, advancing more than 3 percent over the past 12 months to settle within a range of 51 to 52 against the US dollar in December 2019. The strong growth of remittances, foreign investments, service exports, and international tourism revenues are among the drivers that stabilized the value of the local currency.
Fears that the peso would slide below 55 against the greenback amid the political maneuverings ahead of the 2022 presidential elections proved unfounded, and there are reasons to believe that it will remain stable in the coming years on the back of strong macroeconomic fundamentals.
I personally believe the peso will remain strong, as we are poised to achieve an annual gross domestic product (GDP) growth of at least 6 percent over the next three years. The growth in international visitor arrivals, along with rising tourism receipts, supports this optimism.
Data from the Department of Tourism (DOT) show that international visitor arrivals increased 15 percent in the first 10 months of 2019 to reach a record 6.8 million visitors from 5.91 million in the same period in 2018, led by strong tourism traffic from South Korea and China.
Tourism Secretary Bernadette Romulo Puyat said, “the efforts and resolve of the whole tourism industry have paid off with the continued increase in our visitor arrivals and tourist receipts, as well as recognition from major international award-giving bodies.”
The 10-month figure was only 1.4 million short of the full-year target of 8.2 million international visitor arrivals in 2019. The final arrival figure in 2019 will surely surpass the 7.1 million visitors registered in 2018, which was a 7.7-percent increase over 2017.
While the 10-month tourism receipts were not yet available, data from the DOT show that in the first half of 2019, the tourism industry generated some P245 billion, or $4.7 billion, in revenues. That represented a 17.6-percent growth over the same period in 2018, a figure that most likely helped the peso appreciation.
When foreign tourists land at the airport, the first thing they do is go to the money exchange outlets or banks to buy peso so they can get a taxi cab or buy food. They spend large amounts to stay at hotels and resorts, purchase airplane tickets to the different island destinations, shop at our large malls, dine at different restaurants and buy souvenir items. They stir the provincial economies and, in turn, provide jobs to Filipinos.
A DOT survey found that in the first six months of 2019, foreign tourists spent an average of $120.60 per day and stayed more than nine nights in the Philippines. The tourism industry supported 5.4 million jobs and contributed 12.7 percent, or P2.2 trillion ($42 billion), to the country’s GDP in 2018.
Domestic tourism expenditure, which includes expenses of resident- visitors within the country either as a domestic trip or part of an international trip, still accounts for the bulk of the tourism industry.
While the Philippines still has one of the fewest international visitor arrivals in Southeast Asia given its geographic location and archipelagic nature, it emerged as one of the best-performing tourism markets this year.
The Philippines posted an 11.4-percent increase in arrivals in the first half of 2019 and 15 percent in the first 10 months, above the 4-percent growth from January to June worldwide. The World Tourism Organization, an attached agency of the United Nations, reported that international tourist arrivals increased 4 percent in the six-month period in 2019 to 671 million from the same period in 2018. It said the growth in arrivals was returning to its historic trend and was in line with UNWTO’s forecast of 3-percent to 4-percent growth in international tourist arrivals for the whole of 2019.
The Philippines is obviously becoming a popular travel destination in Southeast Asia because of our strong economy, safe environment, and beautiful tourist spots. Once the infrastructure projects under the “Build, Build, Build” program of President Duterte are completed within the next three years, I believe we will have the capacity to double or triple our visitor arrivals that will quickly translate into more jobs for Filipinos and will lead to a stronger peso.