A potent cocktail of domestic and international political headwinds continues to weigh on the Philippines’ economic recovery, even as inflation eased in June.
Economists point to turmoil in the Senate and a recent corruption scandal that rocked the nation as internal shackles holding back an already fragile economy reeling from energy shocks and extreme weather.
Dutch financial think tank ING said in a recent report that political uncertainties compounded the Philippines’ economic pressures despite inflation easing to 6.4 per cent in June, down from its peak of 7.2 per cent in April following the US-Israel war on Iran.
“Headline inflation eased in June for a second month in a row, as global oil prices corrected further, resulting in some easing in retail fuel prices. However, we don’t believe the central bank has enough evidence yet to declare victory on inflation,” Deepali Bhargava, ING’s regional head of research for Asia-Pacific, wrote in the report published on July 13.
“Rising political uncertainty following the vice-president’s impeachment is weighing on investor sentiment, potentially delaying reforms, slowing the growth recovery, and maintaining downward pressure on the peso,” she added, referring to Sara Duterte-Carpio’s trial.
ING’s study supports analyses from other dim projections for the Philippines’ economic outlook.