UK risk advisory group puts PHL on watchlist due to inflation impact

THE PHILIPPINES is on a British risk advisory firm’s watchlist for inflation impact, including possible civil unrest as prices continue to rise, putting it on a similar path to Sri Lanka or Kazakhstan.

In a report issued by Verisk Maplecroft on Tuesday, analyst Hamish Kinnear and Americas Head of politics Jimena Blanco said the Philippines is among the countries it is watching because of its heavy dependence on imported food and energy.

“The rising cost of living will make life hard for the likely victor of the Philippines’ presidential election, Ferdinand R. Marcos Jr.,” the report said.

The report described the Philippines as “high risk” in terms of food and energy security. In a graphic, the firm said unrest has thus far been kept in check because of subsidies and aid packages implemented during the pandemic.

Verisk Maplecroft said that middle-income countries, including the Philippines, are more at risk because they will struggle to maintain social safety nets going forward.

“Unlike low-income countries, they were rich enough to offer social protection during the pandemic, but now struggle to maintain high social spending that is vital to the living standards of large sections of their populations,” the report said.

“The middle-income countries of Sri Lanka and Kazakhstan have already experienced destabilizing unrest this year. In Sri Lanka’s case rising food and fuel prices were a key factor; while Kazakhstan’s attempt to cut fuel subsidies was the spark.”

“We’ve flagged both high inflation and elevated levels of debt as the two major issues that an incoming president would face even ahead of the elections,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail when asked for his views on the advisory. “We believe these challenges pose both near term and medium-term headwinds to growth and development.”

“As such, inflation at these levels will sap some momentum from household consumption, the main component to our growth story,” he added.

The Philippines has been providing subsidies on fuel and food to the transport and agricultural sectors. Headline inflation for April came in at 4.9%, the highest level in over three years. The national debt at the end of that month was at a record P12.68 trillion.

The list of other at-risk countries included Argentina, Brazil, Egypt, Tunisia, Lebanon, Senegal, Kenya, Pakistan, and Bangladesh.

Argentina, Brazil, Lebanon, and Pakistan have recently experienced civil unrest due to subsidy cuts or proposed cuts.

Meanwhile, Bangladesh is the only country on the watchlist rated at “extreme risk” on energy security, with Brazil facing “medium risk” on both food and energy. — Tobias Jared Tomas