Metro Manila (CNN Philippines, October 18) — Persistent rising consumer prices will result in slower economic output this year, the country’s chief economist said on Tuesday.
In a Palace briefing, Secretary Arsenio Balisacan said the country will be impacted by the Ukraine-Russia war, weakening the supply chain and causing fuel prices to skyrocket; natural calamities dampening agricultural production; and the US government’s move to hike interest rates to address rising domestic prices.
“As a small, open economy, the Philippines cannot escape the effects of these global headwinds. The Marcos administration is indeed mindful of these challenges. We are particularly concerned about higher inflation,” said Balisacan, who is also director-general of the National Economic and Development Authority.
“Our analysis shows that sustained increases in inflation in 2022 and 2023 will cause a slowdown in our economic growth, translating into a GDP (gross domestic product) level lower by 0.6% in 2023 than its expected level had there been no sustained inflation shock,” he added.
Inflation in September rose to 6.9%, the highest in four years, with food items—vegetables, fish, and sugar—as drivers of the increase.
READ: High prices still hounding Filipinos in first months of Marcos presidency
The administration targeted to hit 6.5% to 7.5% growth this year and 6.5% to 8% from 2023 to 2025.
Meanwhile, Balisacan said rising prices and interest rates will “mute” improvement in the poverty situation.
However, he expressed confidence that inflation would cool down and return to the medium-term target of 2% to 4%.
“We maintain that the country’s economic prospects remain bright as we get our priorities straight and our acts right,” he said.
Balisacan said the administration is on top of addressing these challenges.
He said Marcos met with his economic team on Tuesday to tackle the issues, adding that the completion of the Philippine Development Plan is slated before the year ends.
“At the same time, we are laying the groundwork for faster, more inclusive growth that generates high-quality employment to reduce poverty rapidly,” he said.
READ: Marcos administration unveils socioeconomic agenda
