AS the economy reopens and prospects brighten, the chairman of the House Committee on Ways and Means on Tuesday said the government’s “worst fears” of stagflation are probably over.
House Committee on Ways and Means Chairman Joey Sarte Salceda said the economic managers’ growth target of 5 to 6 percent of real GDP for 2021 is “becoming increasingly attainable.”
“We will not stagnate in 2022 and 2023, it looks like,” he said.
Earlier, Salceda said “stagflation”—or stagnant economic output amid rising inflation—can be avoided with quick but correct government actions.
“Second quarter GDP growth was 12 percent, immediately followed by a 7.1-percent growth in the third quarter. I am strongly convinced that, if nothing goes dramatically wrong in the final quarter, we will reach our annual growth targets for this year,” he said.
Salceda also cited declining aggregate Covid-19 numbers, accelerated vaccination, and adjustments in the workplace as signs that the economy is ready to rebound.
Salceda, however, cautioned that with a recovering economy, prices tend to rise.
“That could be a problem, because employment and wage recovery tend to come much later than actual growth. So in the meantime, prices will bear down on struggling families,” he said.
“Recovery is starting to come. Inflation will be the next enemy,” he added.
Salceda said he is confident, however, that the monetary policy tools to stave off inflation are there, but adds that supply issues might hamper the stabilization of prices.
“I am confident in [Bangko Sentral ng Pilipinas] Governor [Benjamin] Diokno having the tools to manage matters on the monetary side, but there is little that monetary authorities can do if the problem is on the supply side,” he said.
“That is why, I appeal to the Department of Agriculture, Department of Transportation, Department of Public Works and Highways, and the Department of Interior and Local Government to ensure that there is no congestion of ports, expressways, airports, and other conduit points for supply as demand begins to pick up,” he said.
The lawmaker als suggested the creation of a Task Force Supply Chain Management, along with the Department of Trade and
Industry, to anticipate and prevent supply congestion.
“Additionally, do we have enough drivers to transport food and other goods, especially during the Christmas season? These are questions that a Task Force like that may be able to answer,” he said.
The Bangko Sentral ng Pilipinas projects annual inflation to settle at 4.3 percent for 2021.
Salceda, however, warned that December inflation could be “significantly above the annual average given the sudden pickup in demand that will unlikely be met by proportional adjustment in supply. Unless we do something, of course.”
“I suggest a five-point plan to ensure that inflation does not pick up in this final month. First, we must secure and decongest ports, airports, expressways, and other thoroughfares. Second, the DA must expand efforts to facilitate markets for farmers that are expected to harvest their products this month and prevent spoilage. Third, Customs must be ready to expedite the processing of papers for imports of food. Fourth, the DTI must ramp up consumer protection and price monitoring actions. Fifth, we must lower the price of input goods such as oil,” he said.