INFLATIONARY PRESSURES from election-related spending in 2019 will likely be muted, the National Economic and Development Authority (NEDA) said.
“It’s what we would call some sort of just a mid-term elections so we don’t see much by way of spending kasi hindi naman siya (because they are not) national elections,” NEDA Undersecretary Rosemarie G. Edillon said in an interview on the sidelines of a forum organized by the Center for Philippines Futuristics Studies and Management Inc. in Makati on Friday when asked how inflation would move amid election-related spending in 2019.
“Historically, not so much (inflationary impact). In fact, the uptick is also spread across three quarters,” she added.
Ms. Edillon said that campaigning spending does not have a broad-based impact on prices, explaining: “Kasi nakikita naman namin ‘yung uptick only in certain industries like paper, printing, and transport.”
The Bangko Sentral ng Pilipinas now expects inflation to settle at 3.5% in 2019 from an initial 4.3% forecast. Inflation averaged 5.1% in the 10 months to October against the central bank’s 2-4% full-year target range for 2018.
The government is banking on the impending enactment of a law that will shift the rice trading system — from one with import restrictions to one that liberalizes private sector importation — in order to ease food inflation pressures. That law is expected to slash retail prices of the staple by P7 per kilogram and shave 0.7 percentage point off headline inflation.
In the same forum, Roberto F. De Ocampo, chairman of the Center for Philippine Futuristics Studies and Management, Inc. and a former Finance secretary in the administration of Fidel V. Ramos, had a different view.
“The 2019 inflation would likely increase in anticipation of the local and national elections and the continuing increase in the global prices,” said the former Finance chief, noting that the polls would hep fuel economic growth as well.
The mid-term polls is set on May 13, 2019. The campaign period for senatorial candidates and party-list groups is scheduled from February 12 to May 11, next year, while the campaign period for district representatives, governors, councilors is scheduled on March 29 to May 11, 2019.
A 2010 NEDA study showed that election-related spending contributes an average 0.34 percentage points to gross domestic product (GDP) growth.
Moreover, Mr. De Ocampo forecasted a 6.6-6.8% economic growth for 2019, lower than the government’s 7-8% target, but still strong as it is boosted by public investment from the government’s infrastructure program, as well as robust domestic demand supported by overseas remittances.
“The Philippines will continue to be one of the strongest economies in Asia next year. The economy will gain from the government’s ‘Build, Build, Build’ infrastructure program with the rise of our infrastructure spending,” said Mr. De Ocampo.
“Remittances from overseas Filipinos will still be a major driver of the country’s domestic demand. This will be supported by the increase of investment inflows and our demographic sweet spot and dividend advantages in our labor sector.”
Mr. De Ocampo also flagged external uncertainties caused by the US-China trade war, global monetary policy tightening and uncertainty over the United Kingdom’s exit from the European Union.
“Right now the global situation is more confusing and unstable than the domestic one,” he said. — Elijah Joseph C. Tubayan