MANILA, Philippines - Falling crude oil prices can prove to be a boon to the Philippines, adding momentum to the already strong domestic economy and pumping about $6 billion more in consumers’ pockets, a top official of the Department of Finance said.
Finance undersecretary and chief economist Gil Beltran said the Philippines, which imports almost all of its oil, is expected to significantly benefit from the plummeting price of oil.
Beltran explained that lower oil prices would boost spending power for Philippine consumers, which in turn would help spur economic growth.
Oil’s decline to the lowest in 5 1/2 years, is being viewed as a positive force that could help stay the central bank’s hand on interest rates.
Beltran said the dramatic drop in oil prices is estimated to save around $6 billion per year assuming the price remains at $50 per barrel. The amount is half of the country’s annual gross oil imports of about $12 billion.
“We don’t know if the price will stabilize. Some analysts are saying that the price could hover between $70 and $80,” Beltran said.
Beltran, however, noted that lower oil prices could result in lower tax collections and expenditures.
“Overall it would be positive for the economy but don’t expect to collect higher revenues.
According to an Oxford Economics Ltd.’s December analysis of 45 national economies, the Philippines would be the biggest winner in the record low oil environment with its gross domestic product seen growing 7.6 percent on average over the next two years if oil fell to $40.