So when President Duterte pointed Trump as the culprit in the country’s inflation woes, his statement has elicited laughs and raised eyebrows from critics and haters on social media.
However, if you read the FB posts of the likes of retired broadcaster Jay Sonza and Denisse Eraine, UP Diliman alumna, it appears President Duterte was right after all.
Let us turn our attention first to Jay Sonza’s FB post who asserted that a high crude oil price in the world market, stronger US dollar and the tariff wars of the US versus China and US vs. Canada are the forces that dictates the inflation in the Philippines in particular and the rest of the world in general.
inflation is a global dictate. mas mataas ang inflation sa ibang bansa .
crude oil increase is more than p15 per liter. Phil. tax imposed is only p2.75 per liter.
u. s. dollar got stronger from p47 to p53.50 exchange rate. Wala tayong magagawa lumakas ang dolyar eh.
the tarrif war between America, China and US Vs. Canada and Europe against USA is also a culprit.
ang daming nagmamagaling at nagkukunwaring kritiko hindi naman mga TUNAY na ekonomista.
pinagdaanan na natin ang mas mataas na inflation rate at naalpasan ito.
ang nagpapanik ay iyong mga hindi matanggap na si duterte ang presidente ng pilipinas.
UP Diliman alumna Dennise Eraine echoed Jay Sonza’s assertion but went further by giving the reading public with a more in-depth explanation and statistical data to back up her arguments why the country is experiencing such phenomenon called higher inflation lately.
Like Sonza, Eraine blamed the soaring high global oil prices, US-China trade war, and Trump as the culprit in the country’s inflation woes.
Here are the highlights of the points raised by Dennise Eraine.
On why the high oil global price, Eraine blamed the UN sanction imposed on Iran, thus contributing to the uptick in crude price.
In case you forget, Iran is a major oil producer of the world but the UN sanction due to their Nuclear program denies the world of a sizable oil supply from Iran.
On why the country is the only ASEAN country to hit 6.4% in inflation?
Eraine cited the Philippines as the only country in the ASEAN that has no substantial oil production. In fact, the country is the highest importer of oil in the region which stood at 94% in 2016.
On high rice prices?
Eriane blamed the country’s inability to produce for ourselves. For example rice, wherein the country needs to import to supply the demand of rice-eating Filipinos.
This is evident in our lower export receipts and higher import receipts. Hence our over dependence on imported goods plus we pay in foreign currencies makes it more costly.
Eraine wrapped up her post by summarizing the lessons she learned from her research to explain the relationship between inflation and the prevailing economic realities in the US and the rest of the world.
Please read the long but enlightening post of Dennise Eraine below.
NOTE: Hindi naman kailangan maging Economic Analyst para makaintindi ng kaunting kaalaman at kaliwanagan sa mga nangyayari. So ‘wag akong paandaran na “uy, Economist na siya!” Hindi naman lahat ng taong may alam na “Mitochondria is the powerhouse of the cell” ay biologist.
(CHAR lang! But I mean it when I say, puwede naman tayong magbasa para magkaroon ng onting kaunawaan sa issue. Everyone’s welcome to comment, add something, or educate. ‘Yang mga comment niyong “Uy, Sports Analyst na!”, “Uy, Political Analyst na bigla.”, “Uy, mga Duterte supporters bobo!” — that’s so bad for the growth of our countrymen’s knowledge. Pinapahiya niyo ‘yung mga taong gustong matuto, magbasa at gustong mag-exercise ng utak and opinion 🙂 ‘Wag ganun.
Ultimately, kailangan natin ng tulong ng mga eksperto at MEDIA para hindi magkaroon ng misconception and Mass panic)
Nag-pa-explain talaga ako sa Econ Majors including my boyfriend kasi ayoko naman maging eme-eme lang. Ayokong maki-ride sa galit kung ‘di ko fully naiintindihan. At least kahit summary man lang. NAKAKAGALIT TALAGA! Kasi kulang nalang, mag-Grocery ako sa Kuala Lumpur kahapon at iuwi dito sa mahal ng bilihin! Imagine, isang kilo ng bawang 50 pesos doon tapos dito 250??! 😂😂😂 Yes, nakakaloka ang pag-soar ng prices dito pero ano ba talaga ang posibleng dahilan?
So easy to blame TRAIN and Duterte for the recent Inflation rate but it’s beyond these two hot topics. According to DOF, TRAIN accounts for barely a quarter of the increase. But we still don’t want to believe it.
Truth is, most Emerging Markets are experiencing (and was predicted by the IMF) an upward inflation rate. Turkey’s inflation reached almost 20% this month! (YoY)
1. CHIMERICA TRADE WAR
The China-America Trade War is causing so much harm in Global Trade. Recently, Trump imposed a $200 billion tariff on Chinese Goods. Takot din ang ibang Emerging Markets like Mexico, Argentina, etc kasi hawa-hawa na sa Global Trade ‘yan. One of the Possible effects? Let’s simply say tataas ang presyo ng Apple Products dahil gawa ito sa China. So the US urged Apple to produce their phones and computers in the US. Tataas din ang mga pagkain at prutas, bigas, damit, machines, etc na inaangkat ng US at binebenta sa atin.
2. TRUMP 🙄
As much as I hate to admit it, US is a Global and Economic Superpower. Recently, Trump imposed Tariffs and Sanctions in Turkey’s Steel and Aluminum. It dented the Eurozone Stock Market. We are globally connected by trade, alam natin yan. So when US bullies countries like China and Turkey, anong i-e-expect natin? Bababa ang presyo?
So dahil nga sa isang araw, bigla nalang may na pagpataw ng tariff sa Turkey at China, nagpanic ngayon ang mga investors. Shookt ngayon ang Stock Market. Hours after the announcement, they dropped 400 points. Tumaas ngayon ang interest rate ng US Federal Reserve. Therefore, the US dollar strengthened, other currencies weakened. Including PHP to a whopping 53 pesos = 1 USD. So lahat ngayon ng may utang sa US, nag-panic din. Imagine, if you borrowed money from the US in 2014, their interest rate was 0.25%, NOW, it’s 3%!
This is how powerful Trump/US is, mga kapamilya. (cringe) They can tank economies in one day! Turkey lost 1/3 of it’s currency to the US.
July 2018 – 1 USD = 4.7 Lira
August 2018 – 1 USD = 5.9 Lira (time of Double tariff)
Sept 2018 – 1 USD = 6.5 Lira
However, Turkey is one of the reasons why, geophysically, no war has broken out in that area. They are literally Europe’s shield from ISIS / Syria. It’s Turkey’s soldiers that are guarding the borders, it is Turkey who are housing Syrian refugees. It is a very important country in that zone. That’s why, Europe will have its back. Even Qatar — na hindi bati ng Saudi at US —is offering a $15 Billion bailout to Turkey to save their economy because it will save the zone’s economy, too.
In short, tama naman si Duterte, may role talaga si Trump sa inflation so I don’t understand bakit siya pinagtawanan.
3. RISE OF GLOBAL OIL PRICE
Oh ‘eto, just recently, the Nuclear Sanction on Iran was reimposed. Saan ang sanctions?
-Iran’s purchase of U.S. currency; (hindi puwedeng bumili ng USD, so ang pambayad nila sa import goods nila is their currency, which is weaker. Therefore, it will cost them more money.
-Iran’s trade in gold and other precious metals; and
-the sale to Iran of auto parts, commercial passenger aircraft, and related parts and services.
And the most ominous even to the other markets, in November, there’s a restriction on sales of oil and petroleum products from Iran. Essentially, kapag nakipag trade ka sa Iran ng oil and petrol, may sanction ka from US.
Nakakatakot siya because even the European Markets pleaded na dapat ‘di sila kasali sa Sanction if ever they still choose to trade with Iran. Pero US denied that plea. Basically, sabi ng US, mamili kayo, Iran or US?
Currently, Saudi’s oil supply has halved in terms of production but promised to fill in Iran’s absence alongside Russia. Venezuela’s supply has gone low because of their geopolitics and economics, too. HOW? gegera na naman ng bansang may oil? Sasakupin na naman ng US?
4. Bakit daw tayo lang ang 6.4% sa ASEAN? (See photo)
– again, World Oil Price Hike. Philippines does not have a substantial oil source. Kaya Malaysia 0.9% lang because they export a lot of their products and the have oil aka Petronas. Philippines is the highest oil importer in the region 94 % in 2016 alone compared to Thailand which only imported 70%, Indonesia 41%, Vietnam 20%, and Malaysia 10%. This was 2 years ago, imagine mo ngayon, hindi na tayo gumagalaw sa EDSA sa dami ng kotse na may kailangan ng crudo!
– Too much import dependency and we pay in foreign currencies which makes it more costly
– Rice Crisis (again importing goods)
– Philippines’ export earning was so much lower than our import bill. We can barely produce for this country. Hence the surge in prices. Our export earnings only grew 3.6% in 2017 while our import receipt grew 8.3 % !! Which is bad for us consumers but good for businesses.