Fighting inflation remains the top priority of President Ferdinand “Bongbong” Marcos Jr. as he and his economic team formulate the administration’s economic policy directions until the first quarter of 2023.
“Earlier in the meeting with the economic team, we discussed policy directions for the rest of the year and the first quarter of next year. Number one priority is still inflation,” Marcos said in a social media post on Tuesday.
“We will continue to use interest rates to mitigate the effects,” he added.
Aside from inflation and interest, also discussed during the meeting was foreign exchange.
Central Bank chief Felipe Medalla earlier noted that the peso’s depreciation has been adding to the buildup of inflationary pressures.
Last Wednesday, the peso exchange rate opened at 58.95, at a low of 59.999, at a high of 58.888, and now closed at 58.965 against the dollar, with an average of 58.962, volume at $505.37 million.
While the Philippine peso has lost over 13 percent against the US dollar this year, Marcos remains confident that the country will be able to rise from the record low.
“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, though economic developments are still anticipated,” Marcos said.
Included in the economic team are the secretaries of finance, trade, budget, public works and highways, the socioeconomic planning director-general, and the governor of the Bangko Sentral ng Pilipinas.
Mindful of challenges
Socioeconomic Planning Secretary Arsenio Balisacan said while the Philippines “cannot escape the effects of these global headwinds,” he assured that the administration is “mindful of these challenges.”
“Short-term challenges” like high inflation and rising interest rate, he said, will not disrupt the administration’s post-pandemic efforts towards economic recovery and poverty reduction.
“As we seek solutions to the short-term challenges, we are very careful that we do not compromise our medium-term goals which are to put the economy to a higher growth trajectory so that we can achieve more high-quality jobs and reduce poverty rapidly,” Balisacan said in a Palace press briefing.
Balisacan said through the Medium-Term Fiscal Program and Philippine Development Plan framed by the 8-Point Socioeconomic Agenda, the President’s economic team has developed critical policy and legislative priorities to address the economy’s short-term and medium-term issues in the next six years.
“The PDP’s targeted completion before the end of the year assures us that we will have a robust roadmap for navigating short-term challenges and uncertainties,” he said.
The National Economic and Development Authority director-general added that the PDP contains strategic actions to quickly address constraints in the country’s food, energy, and transportation systems.
Citing government data, he said sustained increases in inflation in 2022 and 2023 will cause a slowdown in the country’s economic growth.
This translates into a gross domestic product level lower by 0.6 percent in 2023 than its expected level had there been no sustained inflation shock.
Balisacan also cited the projection made by the Asian Development Bank and Asean+3 Macroeconomic Research Office that Philippine economic growth will remain robust in 2022 and 2023.
He said their projections stated that the economy is expected to grow by 6.5 percent to 6.9 percent in 2022 and 6.3 percent in 2023.
“Our employment statistics are also encouraging: The unemployment rate has fallen to 5.3 percent in August 2022 from 8.1 percent in August 2021, while the labor force participation rate rose to 66.1 percent from 63.6 percent — an indication that the reopening of the economy is having its intended effects,” he noted.
He assured that current government efforts and subsidy programs will help mitigate inflationary pressures in the country.
“Yes, the intention is to address this inflation, particularly (by) providing assistance to the most vulnerable and poverty groups by continuing the subsidy programs for example that are currently extended by the Department of Social Welfare and Development], our cash-subsidy programs, our assistance to farmers and fisherfolk, drivers, and so on,” he said.
Meanwhile, Balisacan said investment pledges secured by Marcos during his foreign trips may “take time” to materialize.
“As has been earlier reported, there are many of those intentions and pledges. But you know investment, major investments usually take time to materialize,” he explained.
“It’s actually fast if you get those investments in one year because you know when people/investors go to a country or expand their operation in a country, they do their work and to ensure that their investment will deliver them the returns.”
“So as usually the case, you don’t expect that when they promise they will come in, you know, the next day they are here. That’s not the real order,” he added.
Several letters of intent and memorandums of understanding have been signed with Indonesian and Singaporean investors regarding P804.78 billion worth of investment deals during the President’s trip to these neighboring countries.
Marcos’ working visit to the US also secured nearly $4 billion worth of investments, which has the potential of generating as many as 112,285 jobs.