In the annual spring labor-management wage negotiations, base pay was raised for a third consecutive year, but to a smaller extent than last year, and wage increases have been spreading steadily to small firms and non-regular employees. Under these circumstances, private consumption has been resilient, although relatively weak developments have been seen in some indicators.
Rising inflows of foreign direct investments as well as sustained overseas Filipino remittances and BPO receipts provide resilience against external shocks. Moreover, the ongoing global economic recovery bodes well for our merchandise exports. Meanwhile, the movement of the peso remains market-driven. This exchange rate flexibility will promote self-correction mechanisms and avoid dangerous build-up of unsustainable imbalances.