For the country to survive the probability of an economic disaster due to high inflation, low growth, and unemployment spawned by the coronavirus disease 2019 (Covid-19) pandemic, the government is urged to boost agriculture development.
Albay Rep. Joey Salceda in an interview on Monday said one of the government programs that could address these problems of “stagflation” is the rapid implementation of “Plant, Plant, Plant”, the Department of Agriculture’s flagship project.
Salceda, an economist, said investments in agriculture create jobs, improve output, and lower price pressures. “It is one of those rare economic instruments that can address all three economic problems of inflation, low growth rate, and unemployment triggered by the pandemic,” he said.
Stagflation is the triple whammy of these concerns, he noted.
“It’s a problem for economic policymakers because the usual levers of fiscal and monetary policy have tradeoffs. For example, if we lower interest rates to enable growth, we also help accelerate price increases. If you have these three problems happening in scale all at the same time, you are in a bind as a policymaker,” Salceda said.
He stressed, however, that the situation has not yet reached an alarming level. “I don’t think we’re in stagflation just yet. You have to remember that low growth in the country is not due to some cyclical reason or some commodity shock, but because of Covid-19 alone,” he said.
“We have to accelerate vaccine rollout for sure so we can return to more normal levels of output,” he added.
The lawmaker said the country’s economy has not yet reached the alarming levels of aggregate inflation, although higher food prices are already hitting the poor harder.
Inflation target was 3-5 percent, and the country is well within that range, Salceda said.
He, however, said economic managers have to do something about the price increases in pork, vegetables, and fruits, because food price increases tend to have a cascading effect over time. They increase pressures for wage increases.
“The earlier you solve food inflation pressures, the shorter the cascading effect will be,” he said. (PNA)
