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Opinion

Starstruck

COMMONSENSE - Marichu A. Villanueva - The Philippine Star

Most likely than not, the Philippine Statistics Authority (PSA) is coming out any day this week, if not today, the month-to-month and year-to-date average inflation figures for November. The PSA regularly comes out with the country’s average inflation rate every first week of the month. That’s how predictable this process is.

The Bangko Sentral ng Pilipinas (BSP) though predicts the average rate for November may breach the high end of inflation target. The midpoint of BSP forecast ranges from 7.4 percent to 8.2 percent. Inflation rate of the previous month stood at 6.7 percent, a tad shy from the 6.8 percent in September.

The inflation averaged 5.4 percent from January to October this year, which also breached the BSP’s two to four percent target range. BSP Governor Felipe Medalla intimated to media last week they are not ruling out this higher or faster inflation rate uptick due to the “price shocks.” These include the electricity rates going up, transport fare hike, and huge losses of crops and properties from severe tropical storm “Paeng” all happening one after the other last month.

But even the sharpest statisticians could not possibly predict with precision how the economic realities would eventually turn out. This is especially true to the effects of unknown factors that could derail projections.

This early, the economic managers of President Ferdinand “Bongbong” Marcos Jr. (PBBM) have alerted him on the inflation pressures that would not ease up any time sooner. In fact, the rising prices of basic goods and services will continue to rise “until to the end of next year,” Finance Secretary Benjamin Diokno declared.

Speaking in our weekly Kapihan sa Manila Bay last week, Diokno frankly admitted the Philippine economy remains vulnerable to “the lingering effects” of COVID-19 pandemic since its outbreak here in March 2020.  Collectively calling them as the “scarring effects,” Diokno added the Ukraine-Russia war that disrupted the global supply chain have been causing the elevated prices of crude oil products and agricultural goods.

“The inflation is not our own fault,” Diokno pointed out.

In his first weeks into office when he concurrently took the role of Agriculture Secretary, PBBM first described “imported inflation” as the priority concern that he would like to address and focus on the problems it has spurred. As the head of the Cabinet socio-economic cluster, Diokno underscored the Philippine economy “remains resilient and poised for robust growth” despite the gloomy outlook on the global economy.

“Thus, our immediate priorities remain the same, that is, addressing the most pressing issues facing the public: rising commodity prices and the lingering effects of the pandemic,” Diokno reiterated.

Militant groups, however, objected to government interventions allowing import of goods. They argued there are enough stocks of rice, sugar, pork meats, onions and other vegetable products, including fish. If indeed there are enough supplies of these basic goods, then how come their prices are soaring?

“It (import policy) is because we want to control inflation,” Diokno stressed.

Economics 101 tells us it is simply the law of supply and demand. Precisely why, Diokno asserted, domestic production of these basic goods and agricultural products are being “ramped up” to stabilize supply to more than meet the demand of the people.

Proof of that, Diokno pointed to the latest third quarter growth figures of the agriculture sector that expanded by 2.2 percent out of the 7.7 percent growth in the country’s gross domestic product (GDP). However, on the demand side, household final consumption expenditure grew bigger by 8.0 percent for the same period. The biggest drivers of GDP growth in the last quarter in review were the gross capital formation at 21.7 percent; exports of goods and services at 13.1 percent; and imports of goods and services at 17.3 percent.

“The better-than-expected third quarter performance of our economy reflects the many bright spots across the sectors,” Diokno enthused. And the Philippine peso is regaining its strength after nearly breaching the P60 to $1 a few weeks ago. And this is happening amid the global monetary tightening, he added. Peso stood at P55.740 vis a vis the US $1 in last Friday’s foreign exchange trading.

For Diokno though, the country’s employment situation gives the best indicator of improving economic condition. The unemployment rate in the Philippines sharply dropped to 5 percent in September this year, the PSA reported. Diokno noted this was the lowest record before pandemic. It was 8.9 percent in December of 2019. Therefore, more Filipinos got gainful jobs and deriving wages and salaries that go into the income stream of the economy.

“These numbers are telling us one thing: Our economy is continuously recovering,” the Finance chief touted.

Diokno disclosed the Development Budget Coordinating Council (DBCC) will meet today “to review the numbers” and update the Medium-Term Fiscal Framework. This requires “massive investments,” he cited, to generate more quality and “green” jobs across the country as part of the government’s economic recovery strategy.

“This Framework is our north star pointing us towards fiscal sustainability and long-term growth,” he waxed metaphorically.

The eight-point socio-economic agenda as contained in this Framework was first presented by Diokno during the BusinessWorld Economic Forum at the Grand Hyatt Hotel held last Tuesday. Also addressing that forum was Speaker Ferdinand Martin Romualdez who co-authored the now controversial House Bill 6398 seeking to put up a “Maharlika Wealth Fund.” Romualdez filed this last Monday and got expeditiously approved the next day by the House panel for plenary deliberations.

“As the Philippines secures its place not only as the ‘Rising Star of Asia’ but as a real economic leader in the Asia Pacific, the creation of the (fund) becomes imperative,” Romualdez cited in defense of the proposed legislation.

Starstruck? At least, Diokno and Romualdez are both looking at the same star.

PSA

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