Friday, 3 December 2010

Philippines' BPO industry seen growing to US$25 billion by 2015

Manila Bulletin

MANILA, Philippines (Xinhua) - The Philippines is seen to maintain its position as one of the world's top outsourcing destination, generating an annual revenue of 25 billion U.S. dollars by 2015.

The global business process outsourcing (BPO) revenues meanwhile is expected to reach 250 billion U.S. dollars in 2015 from just 150 billion U.S. dollars this year, data from the Business Processing Association of the Philippines' (BPAP) showed.

"More companies are expected to sub-contract service to companies in the Philippines as a way to cut costs," BPAP said.

The country's BPO industry is seen to end the year with 9 billion U.S. dollars in total revenue. The BPO industry is currently one of the major sources of growth of the Philippine economy.

BPAP said the Philippines is expected to maintain its market share of around 10 percent, despite emerging competitors like Vietnam and other countries in South America also joining the race for more clients.

"The country's BPO industry currently employs around 600,000 people. We want that to grow to around 1.3 million workers in the next five years," Danilo Reyes, BPAP director, said in a statement.

He said much of the growth will still come from call centers, which currently make up bulk of the local BPO sector. The Philippines recently displaced India as the world's leader in call centers.

Thursday, 2 December 2010

No to reproductive health; yes to reproductive wealth

By Willy E. Arcilla
Philippine Daily Inquirer
First Posted 21:57:00 11/25/2010

MANILA, Philippines—The Philippine economy is booming—GDP growth rate is accelerating while inflation remains benign. The stock market is on a bull run and the real-estate sector is soaring. OFW remittances, BPO and export revenues are reaching record heights. Unemployment is falling as the job market grows and employee compensation rises.

Interest rates remain low, encouraging investments in high-potential industries like real estate and tourism, manufacturing and BPO, agriculture and mining. The consensus of local businessmen and economists, foreign investors and MNCs is the future is very bright. Based on the latest independent surveys, even the percentage of people claiming hunger and poverty is retreating—all these positive news despite the absence of a Reproductive Health (RH) bill.

Should we not all pause and reflect if the RH bill will help rather than hurt the country?

Let us learn from the errors of the Western countries saddled by aging and shrinking populations, and closer home, even from Asian economic tigers that have regretted their aggressive population-control policy, which are now scrambling to correct their impending crisis of depopulation—Japan and Korea, China and Taiwan, Thailand and Singapore.

No less than US past president Bill Clinton found himself an unlikely spokesman for the anti-RH bill advocates when he categorically admonished political and business leaders at a recent visit to Manila, “You have a large and young population that is a boon.”

A country’s people can be harnessed to become its strongest asset and greatest wealth—both as a market base and a labor force. This is evident in the four BRIC countries (Brazil, Russia, India and China), touted as emerging dynamos not only because of their high growth rates but their absolute size and strength, in which population is a vital ingredient. These four countries alone combine for 2.9 billion people, 48 percent of the world’s population. Even the 10-member Asean’s attractiveness lies not just in being a low-cost production hub, but also in becoming a potentially lucrative market of over 600 million consumers.

Let us not allow the RH bill to distract and divide us. Rather, let us unite and focus on realizing the long-delayed Philippine economic miracle. Let us undertake a structural transformation in our economy, starting with revitalizing agriculture and fisheries to attain self-sufficiency in food production and drive high-value agricultural exports; investing massively in infrastructure; reviving industry to provide gainful employment and export world-class quality products instead of world-class Filipino talent (whom we should safeguard as our competitive advantage in the global economy); promoting the country as an investment haven and a tourism destination. All this will help transform the economy from an over-reliance on OFW remittances and consumption spending so that our people may grow in productivity as workers and in affluence as consumers.

Let us learn from host countries and foreign employers of 11 million overseas Filipino workers (OFWs) and emigrants, who have discovered that Filipino workers are of world-class caliber, but paid in Third World wages in their home country—and rewarded them financially more than we have.

I dread to imagine how our Almighty God and heavenly Father will punish our leaders and our people not just for our collective greed and lust, but our ingratitude for the blessings of a nascent Philippine economic miracle if we insist on legalizing a contraceptive mentality (“more people=more poverty”), and sex without consequence.

Instead of sex education, let us promote “love education”; a culture of life, not a culture of death. Instead of reproductive health, let us promote what I would call “reproductive wealth,” as practiced by the early Christian communities when the faithful worked according to their ability, and consumed only according to their need. “Reproductive wealth” that begets more wealth calls for the rich helping the poor and the poor helping themselves. Once the millions of poor Filipinos can reach middle-income status through better compensation such as profit-sharing, then rich Filipinos can become even richer.

When companies practice profit-sharing, the nation’s 38 million employees will feel more empowered by a real sense of ownership. Workers who are part-owners are more productive. They will drive revenues, cut costs and conserve cash without being told. Such companies will expand further, create more jobs and, collectively, help the country achieve economic growth that will be faster, more inclusive and therefore sustainable.

Here lies the secret to eliminating poverty and corruption. P-Noy (Aquino) says, “Pag walang corrupt, walang mahirap.” The RH bill implies, “Pag walang tao, walang mahirap.” But the truth is the poor do not need more sex and artificial contraception. Rather, they need better-paying work. The rich need to give the poor not more condoms, but more rewards for work to motivate their performance. As someone once said, “We need to put a condom on greed.” Given a chance to reach middle-income status, the poor will not find time to get drunk or gamble, nor enough energy for irresponsible sex. No to Reproductive Health. Yes to Reproductive Wealth. “Pag walang suwapang, walang mahirap.”

(The author is president of Business Mentors Inc. Feedback at

Economic vitality list ranks Manila in top 10 worldwide


METRO MANILA is among the top 10 metropolitan areas worldwide with the best economic performance following the global recession, a ranking issued by the public policy group The Brookings Institution showed.

Brookings, in collaboration with the London School of Economics and Political Science and Deutsche Bank Research, last Tuesday released its "Global MetroMonitor" report measuring the economic vitality of 150 areas in terms of income and employment.

Metropolitan economies -- defined as integrated collections of cities, suburbs and even surrounding rural areas that are "centers of high-value economic activity in their respective nations and worldwide" -- were ranked in three periods: pre-recession (1993-2007), recession/year of minimum growth (2007-2010) and recovery (2009-2010).

Manila, which placed 34th pre-recession, rose to 24th during the downturn and improved further to 9th during the recovery, the Brookings list showed.

Pre-recession, incomes in the metropolis were up an annual 3.4% while employment rose by 2.6%. At the height of crisis, incomes dipped by 0.9% while employment growth eased to 1.0%. Post-crisis, Metro Manilans’ incomes were said to be up 5.3% and employment, 4.0%.

"The global downturn and recovery are accelerating a shift in growth towards lower-income metropolitan areas in Asia and Latin America," the report stated.

The recovery period ranking was led by Istanbul, followed by Shenzhen, Lima, Singapore, Santiago, Shanghai, Guangzhou, Beijing, Manila and Rio de Janeiro.

The bottom ten, meanwhile, was comprised of Athens, Madrid, Johannesburg, Riga, Valencia, Las Vegas, Thessaloniki, Barcelona, Dubai and Dublin.

Dublin, in particular, highlighted how the "Great Recession" had affected economies. From sixth in the pre-recession period it was now in last place.

"The past two decades have seen lower-income metro areas in the global East and South ‘close the gap’ with higher-income metros in Europe and the United States, and the worldwide economic upheaval has only accelerated the shift in growth toward metros in those rising regions of the world," Brookings said.

As lower-income metro areas are expected to post faster growth, the report said policy makers should brace for increased demand from a growing middle class.

Growing demand, it added, will also put pressure on public services and living environments.
Brookings explained that it was "concerned with the dynamics of metropolitan economies and how they compare in terms of their growth performance and potential rather than their absolute economic performance levels."

Sought for comment, National Economic and Development Authority Deputy Director-General Augusto B. Santos said Manila’s inclusion reflected the resilience of the Philippine economy and the effect of fiscal and monetary stimulus provided by the government.

"We are not as dependent in exports compared to Singapore, Taiwan, South Korea and Japan," he claimed.

He added about a fourth the country’s total gross domestic product was attributable to Metro Manila. -- JJAC

Philippine paper money is reliable

John Mangun
Outside the Box
Business Mirror

If you have been reading this column long enough, then you are aware of the problems associated with “paper” money, fiat currency backed with nothing of intrinsic value. The French historian and philosopher Voltaire wrote, “Paper money eventually returns to its intrinsic value—zero.” Friedrich A. Hayek, an Austrian economist said, “Practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.”

However, paper money is a great economic invention. When the supply of currency in circulation is properly managed by a central bank, paper money is a very efficient and effective method of storing wealth and for using as a medium of exchange.

Paper money in circulation is like the lubricating oil in your car’s engine. If there is too little, the system seizes up and will not run. If there is too much, the system becomes overloaded and does not run well. The secret to managing the money supply is to make sure there is just the right amount. Too much money and there will be inflation because of the imbalance between the “value” of the money and the goods the money purchases.

If there is too small an amount in circulation, then the paper money competes with other commodities for value. For example, for many years after the Vietnam War, the US dollar was really the medium of exchange because the Vietnamese government oversupplied the economy with local currency, the dong. Because there was too many dong, that paper money lost value. However, the supply of dollars was constant and held value. Over time though, the amount of dollars in physical circulation became scare. Physical dollars became more and more valuable, creating price inflation for the goods the dollars bought.

It is not only the amount of paper money in the economic system that is important but what that paper money is being used for.

What is happening in the US now, for example, is that the Federal Reserve is printing trillions of dollars that is not being used for economic activity but is being used to pay for more government debt. That is not healthy for an economy.

One of the duties of a nation’s central bank is to keep the money supply in balance with the nation’s economic growth, even to anticipate future growth so as to not have too much or too little money in circulation.

Perhaps the best accomplishment of the Bangko Sentral ng Pilipinas (BSP) through the years has been the management of the money supply. The Philippine money supply has been allowed to expand during periods of strong economic growth and contract when too much paper money in circulation would have been harmful. At the time when the economy really started booming during the presidency of Fidel Ramos, the Philippines’ money supply grew by as much as 25 percent in a year. This is a huge increase that by conventional wisdom would have been crazy. But the economy needed that extra money then and it utilized all those additional pesos in circulation very well.

This year, the BSP is allowing the amount of currency in circulation to grow by about 8-9 percent.

As long as the money is being put to good use and, therefore, inflation is low, the BSP can properly put more and more money in the economic system to help grow economic activity.

Because of what has happened in the global economies, not only during the last two years but for the last two decades, we think of prices bubbles as bad. There is nothing necessarily wrong with price bubbles that pop as long as the increase in price is not based on buying through debt, with borrowed money.

The thing that killed the US stock market in the 1990s and the US housing market most recently is the prices that were artificially high because people used borrowed money. When the borrowing stops and prices go down, the loans still have to be repaid.

Look at the local stock market. After a two-year period of booming stock prices, suddenly this month prices have fallen significantly. Granted, if you invest in the local market, you may have lost money. Get a new stock market adviser because other investors got out weeks ago, now sitting with very large profits.

Yet because the rising stock prices that put the market at an historic high was paid for with cash not credit, we will see stock prices shoot up again very shortly.

More important, though, the way the economy handles cash-based price bubbles is an important indicator of the health of the economic system.

Billions of cash in pesos have been pulled from the stock market in the last weeks. What we have witnessed is how efficiently the economy has handled this excess liquid cash. While the stock market has been drained of large amounts of liquid cash, the government debt market has absorbed a portion of it. The benchmark 91-day Treasury-bills reached an historic low interest rate of 0.775 percent or 67.5 basis points lower than the previous record low of 1.48 percent last November 15, while the yield on the 182-day debt dropped by 33.3 basis points to a new low of 1.650 percent from 1.985 percent. Money easily went from one financial vehicle to another without any disruption to the economy.

Part of this is because these investments are cash, not debt based, and is easily transferable, and part of it is because the BSP has the right amount of paper money in the economic system.

The BSP has maintained prudent and sensible money supply policies through the years and the net result is that the Philippine Peso is reliable and credible paper currency.

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Tuesday, 30 November 2010

Fortress Philippines

Business Mirror

Fortress: Any place of exceptional security; a stronghold.

To use the word “fortress” to describe the Philippines is probably the last thing you would think of about this country. But you might just be wrong.

Financial security is probably the first place you should look to see if the fortress is sound. And some portion of financial security must be measured by the amount of money in the bank. The Philippines currently has in excess of $50 billion of gross international reserves. This may not seem like a lot on money in comparison to some (Thailand is sitting on nearly $100 billion). However, that amount covers almost all of the debt obligations of the government to foreign lenders.

It was interesting to read the negative comments about the nation’s economic growth in the third quarter of 2010; the economy only grew by 6.5 percent. The drop from the second quarter was due to the effects of bad weather on the agricultural sector. But to cast negatives on that economic growth number is pretty silly. Thailand, that “tiger” economy of Asia, is technically in a recession. From the International Business Times, November 22, 2010: “Thailand’s economy fell into recession following a contraction in the past two consecutive quarters, as strong baht and a weak global demand hit the country’s exports.” Thailand’s economy was hit by bad weather, too, as agricultural shrank by 3.3 percent in comparison to the Philippines’ drop of 2.5 percent.

Another important comparison between Thailand and the Philippines is in the area of consumer spending. Filipinos increased their spending quarter-on-quarter, while Thailand saw spending actually down over the same period.

Exports numbers are important to both countries. Thailand’s export growth slowed to 11.7 percent from 23-percent growth in the second- quarter 2010. The Philippines, on the other hand, saw its exports grow by 30 percent.

The appreciation of both nations’ currencies is a great concern. “Exports were weakened by a stronger Thai baht, which rose to a 13-year high against the greenback. The Thai government has imposed a tax on foreign investments in Thai bonds in one of its major efforts to curb the strength of its currency.” Granted, the peso is not at a 13-year high. Yet “The Bangko Sentral ng Pilipinas said the rate of increase in consumer prices could have slowed down further in November partly due to the strengthening of the peso. In October inflation was recorded at a 10-month low of 2.8 percent.” In other words, the strong peso has not hurt our exports over the longer term, but is keeping inflation very low in spite of massive rises in global commodity prices.

Foreign money must consider the Philippines as some sort of fortress also. Almost $1 billion of so-called “hot money” flowed into the Philippines during the first two weeks of November alone, bringing the total to nearly $4 billion for the year. This is what I find very interesting about that most recent $1 billion. Since the beginning of the month, the stock market has been terrible. I would venture to guess that a very small amount, if any, of that $1 billion went into the stock market. That tells us a couple of things. That $1 billion may have come into the country in anticipation of more peso appreciation and in anticipation of more stock-market gains. The foreign money is just getting ready for the next stock-market rally upward. In the meantime, though, that $1 billion has to be parked some place and the choices are either deposits in our fortress-like banking system or with short-term Philippine government debt. This foreign-money action is not what is found with a nation that is weak.

Part of the security of a fortress is the belief that the walls are strong and will hold against danger. Our belief has never been stronger. From the American Chronicle: “Based on its latest Business Expectation Survey, the Bangko Sentral of Pilipinas [BSP] said the overall confidence index reached 50.6 percent—the highest reading since the start of the survey in 2001—compared with the 45 percent in the third quarter this year and 22 percent in the fourth quarter last year.” You might point out, though, that another survey of local businesses stated that new hiring of workers is expected to slow in the first-quarter 2011. This is great news. It means that expansion plans and spending in 2010 have taken hold with much higher employment this year. Build a new factory and then you hire people. Afterward, your hiring demands slow as the factory starts producing profits. Then a year or so later, those profits are placed in more expansion and more hiring. This is an indication that the economic growth we are experiencing is more sustainable than many people think.

Someone once said that if you want to know what you are really like, ask your enemies’ opinion, not your friends’. Perhaps the strongest critics of the Philippines are found in the Philippines. Filipino “workers” groups are some of the most vocal, and I am sure they would never think of the Philippines as a fortress. Their latest protests are themed “Fight Contractualization, Oppose Globalization.” A leader issued this statement: “The Filipino way of life should be a regular job that provides decent wages, substantial benefits, security of tenure, decent working conditions.” That sounds like a good plan, and is a reality for the more than 500,000 people employed in outsourcing with high wages, tenure after six months per labor law and benefits particularly with private medical insurance. Unfortunately for the workers’ group, it is all a result of globalization into “Fortress Philippines.” While other countries (Brazil, Japan, for example) are losing as a result of increase globalization, the Philippines is at least taking some advantage of global economic integration.

The real test is going to come in 2011. Can the Aquino administration make good on its Public-Private Partnership (PPP) program? The success or failure of PPP will be a critical turning point for the country. Will the Philippines be able to continue to build on 2010 economic growth? If so, 2011 will be the most important year of Philippine history in the past century.

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BSP eases fears on peso volatility

Business Mirror

THE Philippine peso is not remarkably more volatile than most other currencies in the region despite the surge in foreign funds from developed economies to emerging markets like the Philippines, the Bangko Sentral ng Pilipinas (BSP) said on Monday.

In a text message, BSP Governor Amando M. Tetangco Jr. said the flow of foreign funds from one market to the other in recent months has rendered recipient market currencies vulnerable to exchange-rate fluctuations as these global fund flows rise and ebb with time.

But he said while the Philippines plays host to some of these global fund flows, the local currency, the peso, has proven more stable than most in the region.

He said the peso averaged P44.18 per US dollar as of the last trading day on November 26, or an appreciation or gain averaging only 5.1 percent from year to date.

The Thai baht, in contrast, has proven more volatile than the local unit as it posted a year-to-date appreciation of 11.1 percent.

The Japanese yen also appreciated by 9.9 percent, the Singaporean dollar by 7.6 percent and the Australian dollar by 9.2 percent.

The Indonesian rupiah also gained on the dollar by 5.5 percent, the Indian rupee by 3.7 percent, the Korean won by 2.2 percent and the Chinese yuan by 2.7 percent.

This means Philippine exporters were slightly more competitive than their Indonesian counterparts and in no danger of losing markets to exporters based in Jakarta.

Philippine exporters were even more competitive than Taiwan’s exporters as the Taiwanese dollar appreciated at a higher rate of 5.9 percent.

Only the Korean won and the Indian rupee showed less volatility than the Philippine peso as their currencies appreciated by only 2.2 percent and 3.7 percent, respectively.

But Tetangco said while the ebb and flow of US dollars has a telling effect on currencies around the region, such effects “could be more or less short-term factors.”

What counts more are long-term factors that affect the performance of the economy in terms of growth and, of course, its macroeconomic condition, he said.

“But if you have a good macro economy, the tendency is for the local currency to appreciate,” Tetangco said.

The country’s growth-positive macroeconomic underpinnings include the high level of gross international reserves totaling $56.8 billion, and expectations of a huge surplus in the balance of payments seen hitting $8.2 billion by the end of the year.

With nine-month overseas remittances already at $13.8 billion, the country’s external sector was expected to end the year on even stronger footing, according to Tetangco.

Monday, 29 November 2010

GDP lessons

Manila Standard

The economy, as measured by the gross domestic product, will likely post a full-year growth of 7 percent this year, a respectable performance given the slow recovery in the major markets like the US and Europe.

Philippine economic growth actually slowed in the third quarter, and to 6.5 percent after a robust expansion of 7.9 percent and 8.2 percent in the first and second quarters, respectively. But all the economy must do now is to expand by at least 5.4 percent in the last three months to attain a growth of 7 percent for the full year.

Holiday spending in the run-up to Christmas and the relatively heavy remittances sent by migrant Filipino workers will ensure brisk economic activity in the fourth quarter. Private consumption will likely be the key driver in the fourth quarter after the Arroyo administration spent a great deal of the budget to pump-prime the economy in the early part of the year.

By now, the current administration must have learned a few lessons in the third-quarter GDP performance. Growth slowed in the third quarter because of diminished government spending, the contraction in the agriculture sector because of the dry spell, and a significant decline in the mining and quarrying industries.

The economy clearly still needs pump-priming, and President Aquino should be aware that deficit spending will be part and parcel of a robust economic expansion. His predecessor front-loaded spending in the first six months of the year, resulting in strong growth.

There is no reason why President Aquino should not emulate what President Arroyo did in the first two quarters of the year. Economic sense dictates that the present government should still spend heavily to nurture growth.

President Aquino must also aggressively put the mining industry back on track. The mining sector directly generates employment in the host community and earns foreign exchange. More farm-to-market roads, bridges and storage facilities, meanwhile, must be given the highest priority to increase agriculture production and offset the effects of destructive typhoons and other weather patterns on farms.

Sunday, 28 November 2010

Palace never informed me why the lake rehab project was junked - Belgian envoy


MANILA, Philippines - Belgian Ambassador Christian Meerschman claimed that Malacanang never told him why the P18.9 billion Laguna Lake Rehabilitation Project (LLRP) to be undertaken by the Baggerwerken Decloedt En Zoon(BDC)was being junked.

The ambassador’s statement contradicted the claim of the Palace that the Belgian Embassy had been informed about the project's cancellation.

Last Saturday, Meerschman said the Belgian government supports the BDC and the project it is undertaking to restore the ecological integrity of 94,900-hectare Laguna de Bay.

He said he remains optimistic the matter can be resolved after his talk with Finance Secretary Cesar Purisima, during which he impressed the importance of the project and the commitment of the Belgian government to support it.

In the same forum, Dimitry Detilleux, BDC area manager for North Asia, denied allegations that the company had bribed government officials, stressing "we would run out of money if we do, considering that you have to deal with 10 or 11 agencies."

Detilleux said BDC stands by its 150 years of experience in dredging and would never compromise its reputation by paying off officials just to undertake the project, which has 37.4 percent grant component using yen-denominated loans.

He said "BDC has developed the technology and expertise to handle the project and it stands by its technical knowhow in pursuing the project."

Gil Navarro, co-convenor and spokesman of the Kilusang Lawa Kalikasan (KLK), said his group supports the project to save Laguna de Bay from dying, stressing that "it is the first time such a project is being undertaken."

He batted for the project since it would increase the lake’s water holding capacity and water quality, perking up open fisheries and improving the catch in fish cages.

Former Senator Francisco "Kit" Tatad said the cancellation of the project was "unacceptable" since it was valid and this had been affirmed thrice by the Department of Justice (DoJ), "which speaks on behalf of government."

He added the matter should be discussed by the Belgian government with the Department of Foreign Affairs (DFA.)

BDC lawyers said the contract was valid and wondered why the government had sat on it since President Aquino took over the government in July.

Former UP College of Law Dean Froilan Bacungan also affirmed the validity of the contract, which is the law between the parties, and said it was clearly covered by the Overseas Development Assistance (ODA) Law and partakes of an executive agreement that must be respected.

Until last Saturday, BDC had not received the notice of cancellation announced last week by presidential spokesman Edwin Lacierda.

Detilleux said his company is still open to talks and possible conciliation and would only resort to international arbitration when all other measures fail.

Growth during Aquino’s 1st quarter slows to 6.5%

AP and Bloomberg, with Elaine Ramos-Alanguilan
Manila Standard

ECONOMIC growth slowed to 6.5 percent in the third quarter, the Aquino administration’s first quarterly slowdown, as weakness in agriculture and other industries offset strong consumer spending, the government said Thursday.

The service sector remained the key source of domestic growth while industry failed to sustain its recovery from the first half, the National Statistics Office and National Statistical Coordination Board said.

A decline in agriculture because of a dry spell, diminished government spending, and substantial deceleration in the mining and quarrying industries also contributed to the slower growth, the government said.

President Benigno Aquino III said he expected a full-year growth of 7 percent despite concern that the peso’s value would hurt exports and the dollar remittances sent by the millions of Filipinos working abroad.

The third-quarter growth compares with the 7.9-percent expansion in the first quarter and the 8.2-percent acceleration in the second quarter. But it was slower than the 7.3-percent median forecast of 16 economists surveyed by Bloomberg News and is the weakest pace this year.

Asia’s growth is moderating after the region led the world out of last year’s slump, with Malaysia and Thailand’s economies expanding the least in three quarters from July to September.

The Bangko Sentral, which has refrained from raising borrowing costs this year to support the economy, could keep interest rates steady “for some time,” Governor Amando Tetangco said Thursday.

“It looks like the policy environment in the Philippines will remain growth-friendly,” said Prakash Sakpal, a Singapore- based economist at ING Groep NV.

“There are worries about a global slowdown and the government is not loosening its purse. There is little chance of a rate hike soon.”

The Philippine benchmark stock index dropped for a fourth day and the peso fell to near a two-month low on Thursday.

Universal Robina Corp. fell to the lowest in more than two months, leading a decline among consumer-related stocks in the Philippines after data showed that consumer spending grew at the weakest pace in a year.

As faltering recoveries in the US and Europe threaten demand for Asian goods, President Benigno Aquino’s pledge to create jobs and cut poverty may also be hampered by a 4.5-percent gain in the peso against the dollar this year that’s undermining the value of remittances.

The money sent home by the more than 8 million Filipinos living in countries including the US and Saudi Arabia account for about a 10th of the economy and help support demand for homes and loans.

“The strength of the peso is sapping the spending appetite of the families of overseas Filipinos,” Emilio Neri, an economist at Bank of the Philippine Islands, said before the report.

“Government spending is also slacking as the new administration wants to signal fiscal discipline.”

The peso rose to the strongest level in more than two years earlier this month, reaching 42.47 to the dollar on Nov. 4. The central bank has eased the rules on foreign-exchange outflows and capped dollar supply in the market by allowing currency swaps to mature as it joined regional counterparts in seeking to slow excessive currency gains.

A stronger peso cuts the purchasing power of remittance-dependent Filipino families and may crimp the record gains in Philippine exports.

The country’s overseas sales increased 46.1 percent in September from a year earlier to an unprecedented $5.31 billion, the biggest jump on record.