Raising food prices and Inflation will push more migration workers abroad says Manila-based 123 Finance Corporation CEO Reuben Fischer

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Jul 18, 2022, 10:00 ET

MANILA, Philippines, July 18, 2022 /PRNewswire/ -- Manila-based 123 Finance Corporation, a securities approved financing firm listed among the official Philippines financing companies, with a Certificate of Authority (CA) data and analytics department has trimmed its forecast for Philippine 2022 economic growth this year however, the country is expected to be among the slowest growing economies in the Asia Pacific (APAC) region for now.

Although the Philippine economy is expected to expand by 6.7 percent this year and is still within the government's revised 6.4 percent to 7.6 percent gross domestic product (GDP) growth target for this year it has not reduced the demand for migrant workers from Philippines looking for greener pastures abroad. The Philippine Labor Diaspora is one of the largest around the world with around 9 million people or an estimated 10 percent of the Philippine population is currently working abroad and sending roughly $33.5 billion (USD) a year back home, a massive remittance that contributes to the national economy annually.

The current CEO Mr. Reuben Fischer of 123 Finance Corporation said: "Philippine growth forecast, raising food prices and Inflation and will push more migration workers abroad due to the lack of increase of local wages and financial stability."

In the beginning of 2022 the Development Budget Coordination Committee, which crafts Philippines macroeconomic assumptions, set a 7% to 9% GDP growth goal for 2022, but this was lowered to 7% to 8% in May due to risks from external factors, such as the Ukraine conflict with Russia, production slowdown in China, as well as the policy normalization by the US Federal Reserve.

Planning Secretary Arsenio Balisacan said the impact may be positive because that would lower the demand for oil. "Of course, the negative implication of that is the demand for exports will be less. But on the other hand, if you look at the sources of growth, you find that domestic consumption, including investment represent a huge chunk of our GDP," he said, adding such could dampen the negative effects of the potential China and US recession.

Apart from the slowdown in China, 123 Finance Corporation also cited the impact of the conflict between Russia and Ukraine, and tight monetary conditions in revising the growth forecast for APAC.

The Philippine Statistics Authority (PSA) Dennis Mapa said on Tuesday July 5 that high food and oil prices haven't peaked yet in the country, even as inflation or year-on-year price hikes hit 6.1% in June, the highest rate since the rice crisis of 2018.

With high inflation expected to linger for longer, new Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla was buckling down to wrangle with consumer prices, which he said will "in all likelihood" exceed the government's target this year and take "many months" to sink back below four per cent, or the level deemed manageable and conducive to economic growth.

National Statistician Dennis Mapa told a press briefing that elevated food, fuel and transport costs contributed the most to last month's headline inflation rate, which matched November 2018's 6.1 per cent.

CEO Mr. Reuben Fischer of 123 Finance Corporation said that, "Amid signs of recovery from the impact of the COVID-19 pandemic, the global economy will be confronted by headwinds from Russia's invasion of Ukraine, which can be expected to have continued uneven knock-on effects on domestic inflation and supply chain dynamics."

Medalla said the BSP has "ample" policy space considering that Philippine banks are well-capitalized and the country's foreign exchange reserves are "robust"

The price of flour in the country is expected to rise, as prices of wheat in the world market continue to increase due to the war in Ukraine, the head of the Philippine Association of Flour Millers (PAFMIL) said. Executive director Ric Pinca affirmed another increase in flour prices.

Moreover, he cited the weakening Philippine peso, now at P56 against the US dollar, is another factor affecting the cost of food in particularly wheat and oil purchases.

123 Finance Corporation reported that the Philippines is among emerging markets likely to suffer the most from expensive oil after the beginning of the recent Ukrainian war that will spark many more migration workers from Philippines in the month to come. High costs of living and low income drives the demand for working abroad and more likely will expand the growing number of OFWs from Philippines abroad.

The official website of the Manila-based 123 Finance Corporation, securities approved Financing firm's website can be found on is on www.123finance.ph

About 123 Finance Corporation:

Manila-based 123 Finance Corporation, a securities approved financing firm listed among the official Philippines financing companies, with a Certificate of Authority (CA) is currently facilitating more than 51% of the Overseas Filipino Workers (OFWs) in foreign countries such as Hong Kong and Saudi Arabia. 123 Finance Corporation Certificate of Authority (CA) can be found on the government website in the list of financing companies as of November 30, 2021 this list of Financing Companies, with Certificate of Authority (CA), subject to amendment/updates.

List of Financing Companies - Securities and Exchange Commission

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SOURCE 123 Finance Corporation