Trump a blow to BPOs, remittances

US President-elect Donald Trump’s plans to bring jobs back home as well as curb immigration are seen impacting on the Philippines’ business process outsourcing (BPO) sector as well as remittances, according to Moody’s Investors Service.

In a report released Thursday titled “Americas and Asia Pacific: Shift in US Policies Could Dampen Trade and Investment, Weaken Growth,” Moody’s said that “while the nature of policies under the next US administration is uncertain, President-elect Donald Trump’s campaign proposals indicate that a shift involving lower US imports and foreign direct investment (FDI), and curbs to immigration is possible.”

“While we expect trade agreements that have already been implemented to remain in place, US policies going forward could incentivize onshoring— the repatriation of jobs at overseas-based suppliers back to the US—and a focus on domestic production and sourcing. The countries that are most reliant on exports of high value-added goods and services, which would offer greatest onshoring potential, are more vulnerable to a potential shift in US trade policies,” the debt watcher said.

In particular, “India and the Philippines could also suffer in the event of policies that disincentivized foreign sourcing of business services,” Moody’s said. These two Asian countries are the biggest BPO destinations in the world. In the Philippines, the BPO sector is among the largest dollar earners, seen to surpass cash remittances from overseas Filipinos in the coming years.

As for Trump’s plan to tighten US immigration rules, Moody’s said it could curb remittances. “A tightening in immigration rules in the US would over time dampen growth in remittances from foreign workers, which are significant for some economies in Latin America and Asia-Pacific,” it said.

“In Asia-Pacific, exposure to remittances is smaller, although they still provide an important source of income for a number of countries. Remittances from the US are largest for the Philippines and Vietnam at 3.3 percent and 3.8 percent of GDP [gross domestic product], and 9.2 percent and 4.1 percent of current account receipts, respectively,” according to Moody’s.

The Philippines and Vietnam are nonetheless expected to withstand any negative impact on remittance flows from the US, Moody’s said.

For one, “the two countries’ current account surpluses and ample foreign exchange reserves would buffer any loss in remittance revenues.”

Citing World Bank data, Moody’s said remittances from the US account for about 34 percent of the total.

Remittance inflows to the Philippines account for 9.7 percent of the GDP, World Bank data showed.

source: business.inquirer.net

Mexico’s peso plummets to new low on Trump effect

MEXICO CITY—The Mexican peso endured one of its worst week in two decades, falling to a new record low on Friday over concerns about President-elect Donald Trump’s economic policies.

The currency traded at 21.15 pesos per dollar on Friday afternoon, down 8.75 percent compared to last week and 1.65 percent from late Thursday, according to private bank Citibanamex.

The peso had started the day even worse, sinking to 21.45 to the dollar, before regaining some ground.

It was among the worst weeks for the peso since an economic crisis and devaluation of the peso in 1995.

The peso had rallied in the hours preceding Tuesday’s election on optimism that Democratic candidate Hillary Clinton would win.

But Trump’s triumph sent the Mexican currency past the 20 pesos barrier on Wednesday while the stock market plunged.

Shares fell 0.54 percent on Friday compared to Thursday and were down 3.68 percent for the week.

The Republican billionaire has vowed to make Mexico pay for a massive border wall and renegotiate the North America Free Trade Agreement (NAFTA).

While Mexico’s government criticized some of Trump’s remarks during the campaign, President Enrique Peña Nieto said Friday he felt “very optimistic” about relations with the new US administration.

Finance Minister Jose Antonio Meade reiterated on Friday that the government, which has international reserves of $175.1 billion, does not need to intervene in the markets to protect the peso for now.

There is “volatility in all the global markets and therefore an intervention wouldn’t have had the impact that we would have hoped,” he said.

But authorities remain “vigilant” in case action is needed, Meade said.

source: business.inquirer.net

PH on wait-and-see mode over Trump’s BPO policy

MANILA — Malacañang is taking a wait-and-see approach on what the election of Donald Trump as United States President would mean for the business process outsourcing industry in the Philippines.

There have been concerns about whether US companies would continue to outsource certain services to the Philippines, given that Trump has advocated US job protectionism, in order to provide more employment opportunities to Americans.

The BPO industry has been one of the most robust in the Philippines.

On these concerns, the President’s spokesperson Ernesto Abella said it would be better to see first what Trump would actually do.

“While his campaign might have raised some concerns especially in the BPO sector, the reasonable response is to wait and see what the new administration’s policy pronouncement’s will be,” Abella said.

Investors could also be expected to go where it would be most beneficial to them, he said.

“As to the BPO industry investors, in the end they will decide and invest in business-friendly countries where they can get better returns,” he said.  SFM

source: business.inquirer.net