Seriously considering moving away from fossil fuels for sustainability is a key step if the country wants to transform its economy, an official of the National Research Council of the Philippines (NRCP) of the Department of Science and Technology (DOST) said.
“We really need to move away from inefficient energy systems, inefficient technologies,” Dr. Lawrence Dacuycuy, an economist and chair of the Division of Social Sciences of DOST-NRCP stated.
Dacuycuy made the statement as one of the resource speakers in the Expert Class webinar “Gas Prices Rising Amidst Ukraine-Russia Crisis,” conducted by the DOST-NRCP.
Dacuycuy explained that it would not be easy to sustain growth due to several constraints that people need to be mindful of. One of them is the capacity of the energy sector to supply the energy that people would want so that the economy will grow.
Also, there’s a need for the government to focus its energy, such as transforming the economy by modernizing certain sectors that are strategic, like services, and manufacturing, at least to sustain industrialization at this point, and to acknowledge the presence or the importance of the fourth industrial revolution and technologies.
Dacuycuy cited the policy approaches of Germany and Portugal, wherein Germany became an export powerhouse because of Russian gas. They partnered with Russia to stabilize their energy needs, while Portugal invested in technologies that would allow them to no longer be that dependent on Russian oil.
He referred tho this as policy anticipation when Portugal thought it was not good as far as national security is concerned to be solely or largely dependent on foreign supply.
“We have to broaden the economic frontier. We have huge reserves in West Philippine Sea, but then there’s a political process that we need to observe. But that’s one way for us to push our economic frontier, otherwise, we will be dependent on foreign resources,” Dacuycuy explained.
He also mentioned that must be considered that inflation is contagious and that is no longer completely domestically determined, which means that there may be shocks coming from other countries, so there may be cause-shocks introduced by their failure to adjust to certain turbulence that may interact with price shocks, especially now coming from the Ukraine-Russia crisis.
“So, if you’re the policy-maker you really have to at least acknowledge that there’s a possibility that foreign shocks get transmitted to the Philippines because the Philippines is an open economy, so we really have to be mindful of how foreign government interventions are transmitted to our economy,” Dacuycuy pointed out.
The economist also added that many governments will say that they don’t intervene in the foreign exchange market, but they do, especially when they have large reserves, they do intervene. So, the problem that is being observed now is that the federal reserve in the United States has been quite aggressive in activist monetary policy. This translated to the dollar’s strengthening at the expense of highly indebted countries and at the expense of developing countries that are highly dependent on imports.
“Before they’re not mindful of this, but then they were stunned by the criticism coming from India.” Dacuycuy said on the current strengthening of the dollar against the Philippine peso and other currencies.
He mentioned that an over-valued currency does not necessarily mean that the currency is in good standing. According to him, there is a need to analyze on a case-to-case basis. For the country, there is really a need to strengthen the way it reacts to inflation because inflation has real effects.
“That’s why it’s good to observe the strengthening of the Philippine peso because it’s really bad if the peso continues to weaken,” Dacuycuy said.
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