One of the key risks to the Philippines over the coming year is a further widening of the current account deficit. Data released earlier in the week showed the deficit widened to 3.0% of GDP in the four quarters to Q3 – the most on record. With weak global demand set to drag on exports and the government’s infrastructure programme likely to keep imports strong, the current account deficit is expected to widen further over the coming quarters. This in turn is likely to put renewed downward pressure on the peso. We expect the peso to fall 5.0% to 55 to the dollar by the end of 2019.
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