MANILA, PHILIPPINES – The international think tanks said, the conflict between Ukraine and Russia will have an impact not only on oil prices, but also on agricultural commodities, potentially leading to weaker trade in the Philippines.
Following Russia’s attack on Ukraine, Oxford Economics and Capital Economics both warned of potential repercussions on global commodity prices that would affect countries such as the Philippines.
According to GMA News, Presidential Adviser for Entrepreneurship Joey Concepcion said Friday during the Laging Handa briefing, “We should brace for price increases. Inflation will go up.”
Brent crude oil prices have surpassed $100 per barrel for the first time in seven years, and economists expect this price range to last for some time.
This would effectively put pressure on pump prices in the Philippines, a net importer of the commodity.
Concepcion added that since Ukraine supplies 25% of the world’s wheat, it might cause increase in the price of local bread.
“Epekto niyan dito sa Pilipinas ‘yung presyo ng pandesal,” the presidential adviser said.
“The shortage of Ukrainian wheat being 25% supplier in the world, of course will affect prices… That is a concern,” he said.
Concepcion stated that because price increases cannot be fully absorbed by consumers, businesses must squeeze their margins. The presidential adviser reiterated his call for the quarantine classification in Metro Manila and other major economic zones to be reduced to Alert Level 1.
“Opening up of the economy will give more strength to our micro, small, and medium enterprises. Whatever happens in the Ukraine-Russia crisis, a strong Philippine economy can weather that,” Concepcion said.
“There’s no other way to do it but reopen our economy so it can withstand any external pressure,” he added.
Analysts previously warned the public to expect higher oil prices as a result of the Ukraine-Russia conflict. According to them, the average price per liter of gasoline may rise from P68 to P77, while diesel prices may rise from P59 to P73.
Since 2014, when Russia launched an attack on Ukraine, the price of benchmark Brent crude has risen to more than $102 per barrel.
Analysts predict that the price of crude will rise to $120 per barrel in the coming weeks.
Meanwhile, according to PhilStar Global, Oxford Economics assistant economist Makoto Tsuchiya stated that the Ukraine-Russia conflict would have a negative impact on the Philippines because global energy prices are on the rise.
“As a result, real incomes will be reduced and consumers will have less money to spend on other things, and therefore household spending will be hit,” Tsuchiya said.
“It will also likely lead to somewhat weaker trade so there will be a dampening impact on exports. Businesses also face higher costs, which they are unlikely to fully pass on given demand is still relatively weak,” he added.