THE country’s inflation should remain within 2 to 4 percent for the first half of 2024, ruling out more food inflation, according to a local think tank.
In its latest Market Call report, First Metro Investment Corp.-University of Asia and the Pacific (FMIC-UA&P) Capital Market Research said “Inflation should remain within the BSP target of 2 to 4 percent for the first half of H1.”
This projection is anchored on the decline in Thai rice prices, which the think tank said started to go down in February, and “ruling out more food inflation from that end.”
On the other hand, FMIC-UA&P said crude oil prices may only have “limited upside due to the tepid rebound of the Chinese economy.”
Meanwhile, the think tank noted that increased infrastructure spending is expected to drive the country’s gross domestic product (GDP) growth and employment this year.
“National government revenues and expenditures exceeded 2023 targets. The administration is poised to ramp up infrastructure spending (plus [public-private partnership] PPP projects) in 2024 to bolster GDP growth and employment,” FMIC-UA&P noted.
According to an earlier story of the BusinessMirror, inflation for all income households accelerated to 3.4 percent while the increase in the commodity prices for the Bottom 30 percent reached 4.2 percent in February 2024. (Full story here:https://businessmirror.com.ph/2024/03/06/high-rice-prices-cited-in-3-4-february-inflation/#:~:text=Inflation%20for%20All%20Income%20Households,National%20Statistician%20Claire%20Dennis%20S.)
National Statistician Claire Dennis S. Mapa said rice prices accounted for 49 percent or 1.6 percentage points of the inflation of all income households and 79 percent or 3.3 percentage points of the 4.2-percent inflation experienced by the poorest Filipinos.
Mapa explained that rice has a huge weight on the bottom 30 percent compared to the all-income households. “The increase in rice price really has a big impact on our headline inflation and the inflation for the bottom 30 percent,” he said earlier this month, speaking partly in Filipino.
Rice has a weight of 8.87 percent in the Consumer Price Index (CPI) of All Income Households and 17.87 percent in the Index for the Bottom 30 percent of Filipino households.
In February, Mapa said rice inflation increased 23.7 percent and 26.3 percent for All Income and Bottom 30 percent households, respectively.
Exports, imports
Meanwhile, the local think tank noted that exports are expected to grow in 2024, but imported goods will remain “elevated” and result in trade deficits similar to 2023.
Philippine Exporters Confederation Inc. (Philexport) President Sergio R. Ortiz-Luis Jr. earlier said that Philippine exports will grow this year, which will be driven by electronics, mining and service exports.
According to the United Nations Conference on Trade and Development (Unctad), international trade is expected to rebound in 2024 after experiencing declines for several quarters.
“Available data for the first quarter of 2024 suggests a continued improvement in global trade, especially considering moderating global inflation and improving economic growth forecasts,” Unctad said.
The UN trade body said rising demand for environmental goods, particularly electric vehicles, is expected to “bolster” trade this year.
However, it noted the need to watch out for “geopolitical tensions and supply chain disruptions” which could persist as “pivotal factors” influencing bilateral trade trends and require “ongoing scrutiny.”
“Disruptions in shipping routes, particularly those related to security issues in the Red Sea and the Suez Canal, as well as adverse climate effects on water levels in the Panama Canal, carry the potential to escalate shipping costs, prolong voyage times and disrupt supply chains,” said the Unctad.
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