Why the Philippines Inflation Shock Is So Worrying
The Philippines declared a national energy emergency in March.
Photographer: Lisa Marie David/BloombergA much bigger inflation shock than imagined is coming for Southeast Asia — if a country that had shown promise is anything to go by. The Philippines, more often the focus of maritime rivalry between the US and China than developing economic trends, is in the grip of a sudden and brutal price surge brought on by the Iran war.
Policymakers and businesses across Asia need to prepare for more tough decisions, as if their deliberations since the conflict began haven’t been challenging enough. They’ll hope that the travails of the Philippines are an anomaly, the result of soaring transport costs in an archipelago that imports almost all its oil from the Middle East and suffers from decades of under-investment in mass transit.
They would be wise to ponder whether, instead, it’s more of a foretaste. Better to plan for some dire outcomes and watch Manila’s response very carefully. Only questions of degree may separate it from neighbors. That might be some comfort, for a while.