Trade Secretary Ramon Lopez expressed confidence the Philippines will not experience stagflation owing to the sustained growth of the economy.
Lopez told a television interview over the weekend inflation will continue to be challenged by the Russia-Ukraine conflict that sends prices of fuel and commodities soaring but that compared with other countries, the rate of increase in prices in the Philippines is not as fast.
“Prices will be a big challenge (to the next administration) and we recommend to improve domestic production especially in agriculture so we can depend on our local farmers. If the supply is not sufficient, that’s the time we can import,” Lopez said.
Lopez is confident of the strong growth momentum after hitting 8.3 percent in the first quarter despite higher prices.
Industry posted a 10.1 percent growth which is faster than the 6 percent pre- pandemic, he said.
Lopez said reforms that lead to the liberalization of investments as well as the approval of the Strategic Investment Priorities Plan will further lift foreign capital infusions which have been hitting records that will translate to economic growth.
“We want to finish (our term) strong; (All the reforms) which the next administration will inherit, and will all materialize in the next administration. I don’t think we will have stagflation. Yes there is cost pressures but growth will be strong,” Lopez added.
Lopez said price adjustments sought by bakers and other food manufacturers will be decided under the next administration to give time to the review the requests.
He noted adjustments will take into account the cost of raw materials, which could take up as much as 70 percent of the cost of production.
Oil and wages, whose prices have gone up significantly, only have a minimal effect on the cost production, Lopez said.
He said the trade department usually allows the adjustment of only a third of the over 200 stock keeping units of basic and prime commodities with increases of between 3 to 5 percent.
