The Philippine peso’s failure to strengthen in face of data showing a widening current-account surplus and an upgraded credit rating has stoked concern that imports are being underreported due to smuggling.
Philippine import data may have been understated since as early as 2007, partly because of smuggling, undermining the strength of the nation’s current-account surplus and the peso, Deutsche Bank AG and Credit Suisse Group AG said in recent reports. There are sizable differences between official import data reported by the Philippines and exports recorded by some of its trading partners including Japan, South Korea and Taiwan, according to Credit Suisse.
“I wouldn’t be surprised if the current account could fall into a deficit in two to three years if the trajectory of trade gaps continues,” said Michael Wan, a Singapore-based economist at Credit Suisse. “That could be a potential trigger, and the peso would be less resilient to risks like portfolio outflows.”
In the past 12 months, the peso has dropped 9 percent against the dollar, compared with a 9.6 percent decline for the Indian rupee. India had a record $88 billion deficit in the fiscal year through March 2013, compared with a reported $9.4 billion surplus for the Philippines last year.