MANILA — The Asian Development Bank’s (ADB) chief economist remains optimistic the Philippine economy will sustain its growth momentum on strong domestic demand and public and private investments, despite rising inflation.
“If you look around the past experiences in developing countries, including the Philippines, 6-percent inflation rate is not necessary worrisome situation because the government has fiscal space, financial space to tackle (this inflation) if they want,” ADB Chief Economist Yasuyuki Sawada told Philippines News Agency in an interview on Wednesday.
Sawada said the 6-percent inflation rate is not necessarily “extreme”, as the Philippine economy has been growing close to 7 percent.
He pointed out the Philippine inflation rate is mainly driven by external factors, noting that global oil prices have increased to almost USD 80 per barrel.
“China is a little exception but overall, price level is increasing mainly due to higher global oil price,” he said.
The Philippine Statistics Authority (PSA) reported that headline inflation rate accelerated to 6.4 percent in August 2018 from previous month’s 5.7 percent.
The highest contributors to inflation in August were electricity, gas and fuels, fish, rice, personal transport, vegetables and meat.
Sawada further stressed that domestic demand and public and private investments are strong to support the continuing growth of the Philippine economy.
To sustain the growth momentum, the ADB economist underscored the need for the government to create an enabling environment, which includes attracting more infrastructure investments.
“That’s very important so government is now engaging in the tax reform to make business, investments in the Philippines more attractive. So I think this kind of policy reform is really right way to put,” he said. (Leslie Gatpolintan/PNA)
