Inflation the biggest challenge in 2022

Inflation will be a bigger threat to economies next year than Covid-19, Benjamin Diokno, head of the Philippines central bank, has recently told the BBC.

He is optimistic that his country’s economy will return to pre-pandemic levels by mid-2022 and said, “We expect the economy to be back to where it was by the middle of next year, or even earlier.”

The Philippines was one of the South East Asian nations worst affected by the coronavirus pandemic.

Diokno said that like many other countries as they emerge from the pandemic, price rises will be a challenge for the Philippines, even as he sees the economy recovering in the months ahead.

“Right now inflation is elevated because of food prices. And that's a result of recent weather disturbances. Also partly because of the international price of crude oil, which of course has affected the whole world,” Diokno said in an exclusive interview with Asia Business Report.

“I think we’ll be over this [the pandemic] by the first quarter of next year, given our ramp up in the vaccination programme,” he said.

Looking ahead to next year's presidential election, Diokno said that “the most important issue at that time” for the Philippines economy will be inflation and unemployment, in particular amongst the youth, BBC published the report on Monday.

“I think the impact of the Covid-19 is on our youth because they lost one full year of studies,” he said.

“The Philippines has a very young population, its median age is 25. So the next government should continue to focus on investment in human capital.”

If Diokno's predictions about economic recovery are correct it would mark a major leap forward from the situation the Philippines found itself in during the Covid crisis.

Just a month ago the country was assessed by Bloomberg as being the worst place to be during the pandemic.

The country has reported more than 2.8m Covid-19 infections, and seen over 45,000 deaths, according to Johns Hopkins University. This is amongst the highest in the region.

According to recent data, almost 70m doses of Covid vaccines have been administered in the country so far. That would be enough to fully vaccinate about a third of the population of the Philippines.

The country's government is trying to push ahead with its vaccination programme. It is reportedly set to carry out a nationwide three-day immunisation drive from 29 November.