Managing inflation crucial for macroeconomic stability

PRIORITIZING the management of inflation is crucial to maintain macroeconomic stability. This necessitates implementing strategic interventions to mitigate risks while capitalizing on growth opportunities. Central to this approach is the timely execution of government budgets in infrastructure and socio-economic projects, alongside encouraging private sector investments.

This was highlighted by economic experts at a recent public webinar hosted by the Philippine Institute for Development Studies (PIDS) which featured the study “Macroeconomic Outlook of the Philippines in 2023–2024: Prospects and Perils”. Presented by Former PIDS Senior Research Fellow Dr. Margarita Debuque-Gonzales, she provided a comprehensive overview of the economic situation in the Philippines from 2022 to projected trends for 2024, covering key areas such as GDP growth, inflation, fiscal policy, and employment.

“Our forecast for 2024 growth is at 5.5 to possibly 6.5 percent, based on our forecasting method and observations of monetary and financial conditions,” Debuque-Gonzales said.

She reported that the inflation rate for 2024 would fall within the target range of 3 percent. “We do not see as many supply shocks for this year as last year. Some forecasts are a bit optimistic about the country’s inflation, and we believe that this can even be lower,” she explained.

Despite these positive developments, she cautioned that inflation threats remain and there is a continued need for high-frequency monitoring and a calibrated response to price developments. Key measures highlighted include the need to mitigate exchange rate volatility, fortify fiscal capacity, protect vulnerable segments of society, and uphold the integrity of the National Investment Fund.

In alignment with these concerns, Department of Finance Chief Economic Counselor Undersecretary Zeno Ronald Abenoja reiterated the importance of reducing the inflation rate and maintaining it within target levels over the next two years to support the anticipated economic growth trajectory.

“If we are looking at the near-term growth prospects, [we have to] support consumption spending and provide macro-stability for investments,” Abenoja said.

He elaborated that encouraging private sector investments and promoting a business-friendly environment are important to generate jobs and improve the labor market. Additionally, Usec. Abenoja emphasized the role of agriculture in addressing food inflation, advocating timely interventions across the supply chain to mitigate food price increases.