What do most Filipinos consider the issue that government should immediately address?
Yes, it’s the soaring prices of basic commodities, according to the latest survey by Pulse Asia.
Based on the survey, 66 percent of the 1,200 respondents identified inflation as one of the three issues that require urgent government attention, higher than the 57 percent obtained in a similar survey in June.
As in previous surveys, controlling inflation emerged as the most urgent national concern across all geographic areas, with the highest in Mindanao (81 percent), followed by Visayas (71 percent), Metro Manila (68 percent), and the rest of Luzon (56 percent).
It appears, however, that comparing the economic situation in the Philippines with other countries, the government is not doing badly in taming inflationary pressures.
After meeting with his key economic advisers recently where they discussed issues affecting the country such as inflation, interest rates, and foreign exchange, President Ferdinand Marcos Jr. said they were able to establish policy directions for the rest of the year and the first quarter of next year.
He believes the overall inflation forecast for the Philippines is still better than other countries, allaying concerns over soaring inflation rates: “We may have to defend the peso in the coming months, but the overall forecast is that we are still doing better than other countries in terms of inflation.”
The Asian Development Bank, in its Asian Development Outlook 2022 update, expects inflation in the Philippines at 5.3 percent in 2022 and 4.3 percent in 2023.
The average inflation forecast for this year based on a survey of 185 countries stands at 11.84 percent.
Venezuela topped the list with the highest value of 500 percent while the lowest value was posted by Togo, with 0.16 percent.
The Philippines is at 140th place, lower than India and only higher by a few points compared to Thailand, Indonesia, Vietnam, Oman, United Arab Emirates, South Korea, Kuwait, Israel, Malaysia, and Cambodia, which all have a forecast of more than 3 percent.
Inflation in neighboring Southeast Asian countries has been mostly in the uptrend with Thailand recording a new 14-year high at 7.86 percent in August 2022.
Singapore also recorded its fastest pace in more than 13 years with headline inflation at 7 percent in July 2022.
Inflation in Lao People’s Democratic Republic is projected to grow by 17 percent, Myanmar by 16 percent, and Timor-Leste by 7.4 percent.
Overall, the Philippines is faring better in controlling inflation than other countries.
The United States had an inflation rate of 8.5 percent in July while United Kingdom averaged 10.1 percent. Other countries like China and Japan also posted increasing inflation rates.
Economic Planning Secretary Arsenio Balisacan, concurrently Director General of the National Economic and Development Authority, recently acknowledged that globally, essential commodities and inputs for food value chains are experiencing substantial supply constraints.
This, he said, is due to the uncertain situation in the Russia-Ukraine conflict and dampened agricultural production due to natural calamities.
As a result, inflation has remained persistently high globally, driven by rapid price increases in food, transportation, and energy.
The Philippines and its Asian neighbors are not spared from these trends, with major economies in the ASEAN, such as Thailand, Singapore, Indonesia, and Malaysia seeing their inflation rates accelerate in the past year.
The Philippines, as a small, open economy, cannot escape the effects of global headwinds, said Balisacan, The Marcos administration is aware of these challenges, and particularly concerned about higher inflation.
NEDA says that sustained increases in inflation in 2022 and 2023 will cause a slowdown in Philippine economic growth, translating into a GDP level lower by 0.6 percent in 2023 than its expected level had there been no sustained inflation shock.
While the poverty situation is expected to improve as the government ramps up economic recovery, inflation and rising interest rates will temper this improvement.
However, the government expects the rise in inflation to be temporary, as it is likely to slow down and return to the medium-term target of 2 percent to 4 percent.
Balisacan is convinced that the country’s economic prospects remain bright as long as it gets its priorities right.\
This outlook is borne out by the World Bank’s October forecast for 2022 and 2023 that sees the Philippine economy growing by 6.5 percent in 2022, second only to Vietnam among major ASEAN economies, and by 5.8 in 2023, or faster than Indonesia, Malaysia, and Thailand.
The Marcos administration, Balisacan pointed out, is monitoring and managing inflationary pressures, and developed a program of interventions, including critical policy and legislative priorities, to address the economy’s short-term and medium-term issues in the next six years.
The government has “a robust roadmap for navigating short-term challenges and uncertainties, laying the groundwork for faster, more inclusive growth that generates high-quality employment to reduce poverty rapidly…and to weather today’s economic challenges.”
That’s a reassuring statement from one of our economic managers—and a timely one—as most Filipinos are already reeling from the current economic crunch.