"Will monetary tools suffice to plug the gap?"
Just when we thought the kind of inflation we experienced last year due to the price of rice principally was tamed by massive imports of the staple, we were jolted last Sunday by news about the drone strikes in Saudi Arabia’s oil fields.
And just as we thought the price of crude in the world market would not spike but for the expected higher demand in winter which would seasonally increase prices a bit, this act of terrorism happens.
The whole world economy would be in tenterhooks as some 5 percent to 6 percent of total daily supply of oil is affected, and only God or Allah knows when Saudi’s Aramco can get things back to normal. Within the day, Brent crude increased by almost 20 percent. How much more shall oil spike?
From the average of $60 per barrel to which the world economy has more or less adjusted, and upon which most growth forecasts are predicated, a spiral towards $80 by November can be “deadly,” unless supply is normalized. But what if the terrorists, whether Houthi rebels in Yemen or Iran-sponsored, strikes again?
The Philippines is almost wholly dependent on imported oil, the gas produced by waning Malampaya just about a drop in the bucket compared to our demand.
And then there is the danger of Asian swine fever spreading beyond the provinces of Rizal and Bulacan. Already, the danger signs are all over, with dead hogs floating in Marikina and Malolos rivers, and backyard piggeries elsewhere in Central Luzon reporting mysterious deaths.
One can only pray for the success of DA’s quarantine protocols in this season of the plague. The hog industry is huge business; pork is staple as well in the Filipino diet.
Debated to death is the immediate impact of rice tariffication and the lifting of quantitative restrictions on rice imports, which has resulted in farmgate prices of palay diving down to below production costs.
Just as harvest draws near, and Christmas as well, our almost three-million palay farmers and their families can only suffer, even with government doleouts which cannot be spread as widely as needed, or as quickly. With this goes the corresponding danger that many farmers will not plant palay after this bitter harvest, even as the cost of further rice imports for 2020 also goes up, affected by the price of oil.
Can our economic managers then control these inflationary developments?
Fragile is the economy.
And with growth worldwide dampened by so many other negative issues such as the US-China trade war, Brexit woes, and ASF, will monetary tools suffice to plug the dam?
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Some will jeer Caloocan Rep. Egay Erice’s suggestion to ban private vehicles in EDSA during peak hours from 6 to 9 in the morning and another three hours at night, yet indeed, desperate times call for desperate remedies.
With the onset of the holidays, the main thoroughfare that links almost all our business and commercial districts as well as work stations and residential enclaves will be in gridlock worse than we suffer at present.
Prioritizing commuters and delivery vehicles over private vehicles may indeed be necessary. This space has always batted for restricting the purchase of private vehicles, never mind the effects on the so-called “car industry” which is almost wholly just completely built units imported from Korea or Thailand or Europe for the high-end brands.
In previous articles in this space, we have suggested the requirement of “certificates of entitlement” such as those of Singapore, where the purchase of cars is predicated on the prior requirement of an ownership right, transferable like a torrens title, the cost of which is quite prohibitive. The rationale is to make it very expensive to own a car.
I know this suggestion goes against the grain of most urban Filipinos’ aspirational ownership of a dream car, especially the upwardly mobile, but we cannot allow the traffic gridlock to remain. There are just far too many vehicles and far too little space in our narrow thoroughfares, with EDSA and C-5, even Roxas Boulevard incapable of expansion.
The cost of fuel alone that is wasted due to heavier than heavy traffic, let alone man-hours of productivity lost, runs up to P5 billion to P6 billion each excruciating day.
Erice’s draconian proposal, perhaps modified a bit and strictly enforced, is a needed palliative, while further on, Congress might want to consider copying Singapore’s restrictive, even punitive requirement on car ownership.