THE Philippine economy is not fully insulated from the geopolitical fallout caused by Russia’s invasion of Ukraine despite its relatively weak linkages with the two feuding countries, a private economist said on Tuesday.
In a research note, ING Bank senior economist Nicholas Mapa said government officials should take into account certain “ripple effects” from the disruptions arising from the war.
Mapa talked particularly about certain imports in the country, and the second-round effects to inflation from rising oil prices. “Crude oil prices are 65 percent, more expensive vs the same period in 2021, wheat is 75 percent more expensive. With energy costs and prices of staples on the uptrend, we are seeing how countries are making a mad dash to secure stable supplies with surging wheat prices driving a 20 percent increase in the cost of rough rice on the global markets,” he added.
Diokno, meanwhile, acknowledged that oil prices could push local inflation to as high as 4.7 percent should the global price of oil hit $140 per barrel.“By the BSP’s forecast runs, it looks as if inflation will breach target if oil prices remain above $100 a barrel. To date, crude oil has stayed elevated for 2 weeks and counting. BSP’s worst case has inflation at 4.
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