First is inflation. I have not tracked the price increases in the two years I have lived here but one item I remember is gasoline. When I first moved here, gas was about 30 pesos per liter. Today it is 43.80 pesos per liter, which is one peso less than it was in the past few weeks. From what I could find, the inflation rate in the Philippines is about 4.6% whereas the U.S. is around 2.6%.
Then since most Expats live from the payments of their retirement, pensions and investments you are at the mercy of your home countries conversion rate to pesos. When I visited here the conversion of the U.S. dollar was at 50 pesos. When I moved here, it was down to 40 pesos to the dollar and lately it has hovered around 46 pesos. Not only does your dollar goes less far once converted to pay your expenses, the imported products you like to buy to make it feel more like home gets more expensive too.
Your lifestyle here is going to be based on that conversion. Some people predict there is the possibility of the conversion to drop to 30 pesos to the dollar since the U.S. dollar value has been dropping in value. As the peso drops, you get less for your dollar after exchanging it to pesos.
Some Filipinos like to see their peso get stronger. However, what does that end up doing to the country and all the people living here? Well, look at this, 14% of the GNP is OFW (Overseas Filipino Worker) remittance. The OFW administration requires the OWF to be paid in U.S. dollars. As the peso gets stronger and the exchange conversion gets less all the families get less pesos each month. Then manufacturing and importers are paying more from products purchased from America. Then exported products will return fewer profits.
Another worry in the future is available electricity here. Another site wrote an article that there is less availability of electricity in the Philippines. This is because of the increasing demand for electrical power throughout the country and scheduled moving brownouts might occur in the future to reduce electric consumption. To fix this problem more power generating plants will need to be built. Who will pay for these new generating plants? Of course, the consumer. Here again will be an increase of cost to live here.
Even though it is cheaper to live here than in our home country, it is still not an easy ride here. With currency conversion rates unpredictable, increase in utility costs and inflation here and abroad life will get more difficult.
I am going to expand this to another article about starting a business and making money here. Look forward to it.