The Russia-Ukraine conflict has triggered multi-pronged developments with significant impact on emerging economies like the Philippines.
The country’s economic managers have flagged four areas of concern.
On inflation, oil and fuel prices have begun to spike as Russia is a major source of crude and the largest exporter of natural gas and wheat, while Ukraine is the fourth largest exporter of corn. Interest rates will likely go up, but this would be more likely on account of the US Federal Reserve’s moves to tighten monetary policy. Investments are likely to be affected by increased investor risk aversion while global policy uncertainty could lead to capital outflows and cause fiscal stress. Fiscal spending is the fourth area of concern. Ultimately, the government --- while still reeling from the massive shocks inflicted by the coronavirus pandemic --- will be hard-pressed to increase funding for social protection programs to support vulnerable sectors of the citizenry.
On Thursday, the Department of Budget and Management released P3 billion to fund the government’s fuel subsidies for the public utility vehicle (PUV) drivers and the agriculture sector. Fuel subsidies amounting to P2.5 billion will be distributed to the public transport sector and P500 million to the agricultural sector for targeted farmers and fisherfolks. The fuel assistance vouchers will benefit over 377,000 qualified PUV drivers including those operating jeepneys, UV express, taxis, tricycles, and other full-time ride-hailing and delivery services nationwide.
With the continuing fuel price spiral, public utility vehicle operators have also signified their intention to petition for new fare hikes. Meantime, restive labor groups have also begun sounding off on the need to raise minimum wage levels as the workers’ take home pay is inadequate to cope with increased cost of living.
Indeed, as pointed out by Senate Minority Floor Leader Franklin Drilon, the country is struggling to cope with a proverbial perfect economic storm that requires a comprehensive response. For its part, the Bangko Sentral ng Pilipinas (BSP) has vowed to provide steady monetary policy support and work with the national government in crafting appropriate and timely interventions.
Somewhat muting the hue and cry over the deepening economic woes inflicted by the aftershocks of the Ukraine-Russia conflict is the excitement generated by the current election campaign. Many sectors seem to be buoyed up by the possibilities that a new cohort of national and local leaders would be able to steer the ship of state capably amid turbulence and uncertainty. Such optimism could be fruitful only if the people’s mandate is expressed clearly through clean, orderly and credible elections.
It is imperative that the citizenry look beyond the immediate effects of current events. The votes that will be cast on election day will have far-reaching implications in terms of facilitating the ascendancy of good governance that would make economic recovery and sustained long-term growth attainable.