MANILA – As the economy makes a deep nosedive, inflation is heading north at maybe a worrying speed.
It’s an ugly combination that economists termed as “stagflation”.
But President Rodrigo Duterte’s top economic manager Karl Chua had signaled on Friday that there’s a chance – by the second quarter – the Philippines could be pulled out of the recession it sank in. That means the economy is not as distressed to warrant the use of the term “stagflation” to describe where it is going.
The Philippines is headed for rough economic waters, with economists flagging rising prices of pork, food, and oil as headwinds working against its recovery.
Economist Nicholas Mapa warned of “slowflation”; others label it “slugflation” but both mean fragile economic recovery wobbling amid higher costs of goods and services.
“Just when we start to see positive growth by the second quarter of this year, we expect also to see inflation threaten the topside of the Bangko Sentral ng Pilipinas’ (BSP) inflation target,” Mapa said in an interview.
The Dutch financial giant forecasts inflation to peak in the third quarter at 3.8 percent, before ending 2021 at an average of 3.6 percent, close to the higher end of the central bank’s official 2 percent to 4 percent target band. BSP has penciled in the likelihood that inflation could breach 4 percent as early as January.
Last year, inflation averaged 2.6 percent, settling within what the monetary authority had aimed for. Economic growth, meanwhile, was a negative 9.5 percent, the worst since the wartime era.
Inflation takes the spotlight in the debate about recovery because the economic team was banking on consumption to rev up the economic engine. When prices become unbelievably high – just like pork in the wet market doubles to P450 per kilo and eggplant to P200 per kilo – consumers’ money, assuming they still have jobs, will have little value. (CNN)
