THE PHILIPPINES’ capital city, Manila, jumped 29 places in Mercer’s 2019 Cost of Living Survey, marking the fourth sharpest climb in the world.
The Philippines ranked 109th most expensive city for expatriates out of 210 localities on this year’s list — the 25th edition of the survey.
The study measures the comparative cost of more than 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment. Cost of living and rental accommodation cost comparisons were derived from a survey conducted in March.
“Cost of living is an important component of a city’s attractiveness for businesses,” a press release quoted Yvonne Traber, Global Mobility Product Solutions leader at Mercer, as saying.
The survey is designed to help firms come up with compensation packages of their expatriate employees, so that they maintain their purchasing power when they are deployed to another country.
For Mario Ferraro, Mercer’s mobility leader for Asia, Middle East, Africa and Turkey, “[w]hile the Philippines’ robust economic growth continues to attract talent, business, and investments from all over the world, the findings of Mercer’s 2019 Cost of Living study should signal its public and private sectors to take a deeper look and start a conversation on which factors are behind the dramatic increase in its cost of living from 2018 to 2019, and how they can be addressed or mitigated to ensure the country’s continued competitiveness.”
“Eight of the top ten cities in this year’s ranking are in Asia due in part to a strong housing market,” Mercer noted in its statement.
Hong Kong retained its distinction as the world’s most expensive city, followed by Tokyo; Singapore; Seoul; Zurich; Shanghai; Ashgabat, Turkmenistan; Beijing; New York and Shenzhen.
Mercer noted that Ashgabat climbed 36 spots “to record the biggest increase in cost of living”. It was followed by Phnom Penh, which went up 34 places to 108th this year, while Havana went up 32 spots to 133rd place.
Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC), said that Manila’s sharp climb on this year’s list may have been due to the fast inflation and higher interest rates in 2018, which spilled over in early 2019, as well as the relatively fast growth of the economy in terms of gross domestic product compared to other Asian countries. “Faster increase in cost of living may also reflect the sustained growth in rental rates and property prices in recent years,” Mr. Ricafort said in a mobile phone message when sought for comment.
In a separate text message, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said that “GDP growth is one” possible factor for the Philippines’ rise on the list, since economic growth spurs a rise in prices.
“The rise of labor costs is another. Another would probably be the rise of real estate costs. Inflation also has a factor in the rise,” Mr. Asuncion said.
“It is known that as economy expands, along with it is the parallel rise of various costs. Some of these costs are labor-related like wages and the cost of living. Thus, it is somehow expected that the Philippines has risen in the survey.”
The Philippine economy expanded by a disappointing 6.2% in 2018 — the slowest clip in four years — against the government’s 6.5-6.9% target, but at that pace it was still one of Asia’s fastest-growing economies. GDP grew by 5.6% in this year’s first three months — its worst quarterly performance in four years — against an official 6-7% goal for 2019.
The Philippines last year also reeled from successive multi-year-high inflation rates that peaked at a nine-year-high 6.7% in September and October. Headline inflation averaged a decade-high 5.2% in 2018 against an official 2-4% target. — Vincent Mariel P. Galang