Growth drivers like manufacturing and infrastructure should be the next focus of the Philippine government to curb the inflation rate, the Bank of the Philippine Islands (BPI) said.
In a report from the Inquirer, BPI global market economist Rafael Alfonso Manalili said consumers carry the burden of the increasing inflation rate, hence “policymakers” must spread its growth drivers in case “future shocks” happen again.
“The pandemic has taught us that we need to diversify our growth drivers. We need to go beyond household consumption and services so that we can have an additional cushion in case another shock happens. This will allow us to grow faster and will protect us from external shocks like the COVID-19 pandemic,” Manalili said.
He added that focusing on investment spending, manufacturing, and exports would ease the country’s exposure to external shocks. Moreover, the mobilization of various infrastructure programs can attract investments.
“We need to reduce the cost of producing goods, and to do that, we need to improve infrastructure. We have the highest electricity rates and transport costs in the region. It’s feasible for us to improve on that,” the BPI economist said.
Last March 2022, the Department of Finance (DOF) urged the next president to prioritize infrastructure for the country’s continuous growth and recovery from the previous pandemic.
An Eye Out for Inflation Rates this 2023
The average inflation rate this year would play around 4.5% to 5.5%, Manalili said.
“Inflation has gone up significantly and it has a significant impact on the economy because we are a consumer-driven economy,” he added.
The Philippines recorded an 8.6% inflation rate for the month of February 2023, a slight decrease from January 2023’s rate of 8.7%.
In order to curb the upward trend of inflation, the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) raised the policy rate by 0.5 percentage point (ppt) to 6% from 5.5%, according to a report from Inquirer.
This means that property seekers may need more time to think when taking out loans from banks as the cost of money increases.
Alternatively, property buyers can look into other loan programs of Pag-IBIG, Social Security System (SSS), Government Service Insurance System (GSIS), and Social Housing Finance Corporation (SHFC). That way, it is still possible to become a real estate owner amid challenges.
In a media briefing last February 16, BSP Governor Felipe Medalla noted that the policy rate will “unlikely” decrease again.
Real Estate Remains Good Investment
With the country’s 2022 gross domestic product (GDP) exceeding expectations, the MB said raising the monetary policy rate could moderate potential price increases for goods and services.
“An upward adjustment in the policy interest rate would also prevent inflation expectations from drifting further away from the target band,” it added.
Despite the challenges of the economy, real estate is still a good investment amid inflation rate hikes according to brokers. This is because of its stability and appreciation value.
Moreover, using land as an inflation hedge can be beneficial during unpredictable circumstances as long as owners are knowledgeable about money and investments.
The best time to invest in real estate is now. With various programs, tools, and options available to help property seekers in their buying journey, it all boils down to the buyers’ initiative to forego old habits and make room for new opportunities.
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