External headwinds

The price shocks besetting Filipinos, now the main preoccupation of President Ferdinand “Bongbong” Marcos Jr., is a global phenomenon rippling down to the nation.

Greatly affected are rice prices that had surged with the government hoping to tame them through price caps of P41 per kilo of regular-milled and P45 for well-milled grains.

In its latest review of the domestic fiscal situation, an International Monetary Fund team said that while the economy has emerged from the pandemic strongly, it now faces “a confluence of global shocks.”
Growth moderated from 7.6 percent in 2022 to 4.3 percent in the second quarter of 2023, which IMF attributed “to a weak global economy and tightened policy settings.”

The IMF, thus, recognized that the weak state of the global economy has had a strong impact on the country and that the response through the tightening of the money supply by the Bangko Sentral ng Pilipinas resulted in a growth slowdown.

An acceleration in public spending and an improvement in exports is expected to lift the gross domestic product by year’s end to 5.3 percent in 2023 and 6 percent in 2024.

The risks associated with the slowdown in the economy all originated beyond the Philippines. The IMF review said the main downside risks to the outlook include the persistently high global and domestic inflation that could necessitate a further tightening of monetary policy. This abrupt global slowdown may further weaken goods and services exports, intensifying geo-political tensions and depreciation pressures stemming from capital outflows under volatile market conditions.

Recent surveys showed that rising inflation has been the major culprit for the weakening of the public ratings of President Marcos and other high officials.

Consider the resolute actions taken to arrest the price upsurge, particularly the calculated measures to place a ceiling on retail costs while the National Food Authority intervenes to keep farmgate prices high.

Another budding concern should be the weakening in foreign direct investments, or FDI, which needs to be reflective of the high confidence level of investors, according to Trade Secretary Fred Pascual.
Pascual cited the capital being plowed back and the rising cost of business projects listed with the Board of Investments and other investment promotion agencies, which would mean optimism in long-term prospects.

He said FDI numbers reflect investors’ decisions well before the funds were released that go into the BSP records.

The past practices of market manipulators with political agendas were to hit the equities and foreign exchange markets while influencing the flow of investments.

Keeping these economic indicators weak makes it easy for opportunists to paint the perception of a looming economic crisis where there is none.

For instance, during the shortened term of President Joseph Estrada, the peso depreciation that caused a dip in the stock market and a supposed capital flight were thoroughly exploited to show mismanagement of government that resulted in his eventual downfall.

The recent association of high prices and the plunge in the survey ratings of Marcos and other officials raises suspicions of another black operation, which had been heard since the new leadership assumed office.

It is not farfetched that the playbook of EDSA 1 and 2 is underway to undermine the Marcos administration.

Another element that should be considered is the growing insecurity of China amid the strengthened relations between the Philippines and the United States.

Considering its economic clout, China can manipulate situations that may pave the way for political conditions to favor its interests.

The accurate picture is that most of the problems confronting Marcos are outside his control since they emanate from beyond the border.

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Credit belongs to: tribune.net.ph