PRICE increases driven by the disruption of global supply chains amid the coronavirus outbreak may force domestic producers to shift to other sources of materials to avoid production cuts, according to the Department of Finance (DOF).
But, at the same time, the DOF
said in its economic bulletin that the country’s inflation is seen to be pulled
down by “benign global oil prices” as
Dubai crude oil dropped to $54.24 per barrel in February 2020
from $63.76 per barrel in January 2020 and $64.32 per barrel in February 2019,
showing 14.9-percent month-on-month and 15.7-percent year-on-year decreases.
The economic bulletin was issued
after the Philippine
Statistics Authority (PSA) reported last week that inflation eased in February
to 2.6 percent from 3.8 percent last year and 2.9 percent recorded in January.
“The disruption of global supply
chains will tend to push prices up. Domestic producers will need to look for
alternative supply sources to avoid production cuts. Initial data from BOC
[Bureau of Customs] show that imports from China, the country’s biggest trading
partner, declined 34.7 percent volume-wise in February 2020,” Gil
Beltran said.
Customs take dips
Data from BOC obtained by the BusinessMirror
showed the country suffered a P2.7-billion revenue loss from the decline in
imports from China for February
alone.
Revenue collections on imports from China in February slid by 27.41 percent to reach P7.17 billion from P9.88 billion in the same month in 2019.
The revenue loss recorded on imports from China for the month also contributed to the overall decline in revenues collected by BOC for all imports that came from all countries last month. From P42.77 billion in February 2019, this dropped by 2.58 percent to P41.67 billion in February 2020.
Beltran also pointed out in the same economic bulletin that February inflation easing to 2.6 percent was also lower than the 3 percent median outlook by private-sector economists.
The latest PSA data brings year-to-date inflation to 2.8 percent, within the government’s target range of 2 percent to 4 percent for the year.
“For inflation to fall within the target range, month-on-month price change should be at most 0.3 percent per month,” Beltran said.
The slowdown in average prices of both food and nonfood items contributed to the deceleration in price growth, DOF said.
Slower price increases in February were recorded in Transportation at 1.2 percent from 13 percent in January; and alcoholic beverages and tobacco, 23.4 percent from 25.3 percent.
The top contributor for February, food and nonalcoholic beverages, posted an annual increase of 2.1 percent and accounted for 33.2 percent of the inflation print.
Other top contributors to overall inflation were housing, water, electricity, gas, and other fuels and, restaurant and miscellaneous goods and services.
The National Economic and Development Authority (Neda) earlier said the reduction in the country’s GDP growth could reach 0.3 percentage point if the impact of the virus lasts for six months, and 1 percentage point in GDP growth if the virus infects the economy for the whole year.
This means that if the government expects a growth of 6.5 to 7.5 percent this year, a full percentage reduction will cut GDP growth to a range of 5.5 to 6.5 percent in 2020.
