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BRACE FOR HARDER IMPACT! IS PHILIPPINE ECONOMY RESILIENT ENOUGH?

As we all know my dear readers of my article here, we wrote about the effects of the Russian – Ukraine conflict that results into armed encounter . (Brace for Impact : The Russian Invasion and the effects to the Philippine Economy posted on February 25, 2022). We thought that it will be swift and temporary scenario as the two nations try to negotiate and find solutions to the conflict but they ended up in a tightrope situation. Moscow is eager to captive the capital of Ukraine but Russian forces are facing a stiff battle with security forces of Kyiv ready to fight until the last drop of their blood. Different economic and monetary sanctions were hammered in an attempt to bend the knee of Pres. Putin to bring back to the table and talk about the situation but the Russian leader is determined to fight at the expense of his army.

The Looming Global Food Crisis
The war that we don’t know how and when it will end, the world is now facing a new threat aside from the ongoing pandemic; the Global Food Crisis. Yes, you heard it right! But how did the world get into this?

First, most of the countries, especially EU countries decided to embargo the Russian oil exports. As a result, oil demand was high and with a little supply available it cause skyrocketing prices in the markets.

Second, Ukraine and Russia are the world’s largest importers of wheat that use in our bread, pastries and other products that use wheat as a raw materials. With the ongoing war, countries are racing in time to find where they can import it.

Third, food-exporting countries like Argentina, Thailand, Vietnam just to name a few decided to halt exporting their food and agricultural products to ensure food stability in their own countries. These series of events plus the resurgence of COVID 19 in some parts of the world make up the looming and if not inevitable scenario.

How Is Our Economy get through with these?
Yours truly had made several articles regarding calls for Food Security, Importation, and Energy self-reliance (see footnote). We emphasize to look into agriculture sector because obviously, this is the backbone of the economy. Sadly within the mouth of the outgoing agriculture secretary, he describes the sector that it is “grasping its breath”. True enough, our poor farmers and fisher folks, poultry and hog raisers are grasping their breath because of little or worst LACK of consistent program in the sector. Lack of financial access to the affordable loans that can be a great help to them. The Import Import Import policy of the government to suffice the food supply instead of helping the sector to increase the production. The Oil Deregulation Law gives a free hand to oil companies to dictate the prices without EVEN the intervention of the government during this extra ordinary times. In Economics we believe in “laizze faire” doctrine which means letting the economy maneuvers on itself but still the regulatory part which is the government must not be neglected.


Is our economy can still absorbs the external shocks and headwinds?

Well, I’m affirmative enough that we can weather this. The government must act fast, swift and timely in order to address the pressing needs of time. Despite the turbulence, our Q1 GDP growth was among the fastest in ASEAN at 8.1%. Good thing that we were able to manage our COVID 19 situation which is also a great catalyst so that we can further open our economy. The call for the suspension of excise tax for oil was a red flag to me. Instead of suspending it, we must use the tax we collect to help or mitigate the impact of oil prices on the affected sectors like transport, agriculture and others.

I call on LTFRB to ramp up and finish the distribution of “Pantawid Pasada 1” because it was long overdue so that we can proceed to the second tranche. I will not tired to call on the Department of Agriculture to focus and have a consistent program in the sector. Importation must be the last resort in the solution for food security. Again we will get through this storm and we can see the light at the end of the tunnel.

Footnote:
Food Security Equates to Economic Recovery posted last November 15, 2021
Is Philippines Self- Sustaining Electrical Supply Possible? Posted on November 26,2021

REVISITING OIL DEREGULATION LAW posted last October 30, 2021
Importation: Is this All the Answer? posted Feb 12, 2022

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