Salceda: Boost agriculture development to prevent economic disaster due to inflation
By Mar S. Arguelles
For the country to survive the probability of an economic disaster due to high inflation, low growth, and high employment spawned by the coronavirus (Covid-19) pandemic, the national government should boost agriculture development.
Albay Rep. Joey Salceda said one of the government program that could address these problems of “stagflation” is the rapid implementation of ‘Plant, Plant, Plant,’ the Department of Agriculture (DA) flagship project.
Salceda, an economist, said investments in agriculture creates 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 added.
Stagflation is the triple whammy of high inflation, low growth, and high unemployment, he said.
“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 admitted 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.”
“We have to accelerate vaccine rollout for sure so we can return to more normal levels of output,” he 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 pointed out.
He, however, said that 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.
According to the Albay solon, inflation, unemployment, and low growth definitely hit the poor harder, so we must always take not the aggregate or average view, but the view of the vulnerable.
“I want to give the BSP the benefit of the doubt and say it’s not denialism. I would remind them, however, that aggregate numbers do not always reflect the extent of the misery of those whose means fall below the average,” he said.
Salceda, who is the chairperson of the House of Representatives’ Committee on Ways and Means, said while good aggregate numbers work in business, policymakers have a responsibility to protect those whose misery the numbers may obscure.