Are we in stagflation mode?

IN a recent appearance on the TV talk show “Storycon,” Professor Jan Carlo “JC” Punongbayan of the UP School of Economics expressed his opinion that the Philippine economy is now on stagflation stage because it combines an unusually weak economic growth and persistently high inflation.

The dictionary defines stagflation as “an economic condition defined by the combination of persistent inflation, slow or stagnant economic growth, and relatively high unemployment.”

This squares with the finding of the Philippine Statistics Authority (PSA) that the Philippine gross domestic product (GDP) grew by just 2.1% in the third quarter of 2026, down from 2.4% in the second quarter. On a quarter-to-quarter seasonally adjusted basis, output grew by only 0.1%.

Prices have climbed rapidly, with headline inflation accelerating to 7.2% in September and 7.8% in October 2026.

With growth averaging 2.5% for the first nine months of 2026, Punongbayan opined, our economy would need to expand by over 6% in the fourth quarter just to hit the low end of the government’s reduced 3.5% to 4.5% target.

“By a moonshot,” Punongbayan quipped to stress his point.

In a number of media interviews, President Marcos vaguely admitted that our slow economic growth is driven by global oil shocks and Middle East tensions.

Needless to say, a slow economy exposes our human resources — the skilled and unskilled laborers who toil for a living for the survival of their families – to insecurity of tenure in the workplace.

It is unfortunate because our laborers are the cogs in the wheel of sustainable productivity.

In the Philippine setting, sustainable productivity is essential to the survival of Filipinos who now number around 118 million.

We are still the 12th most populous country in the world. And yet we are among the smallest, an archipelago with a land area of 115,830 square miles. Small but terrible?

Unfortunately, the development of our economy has lagged behind our population growth. We have more mouths to feed than we can afford. I remember an extreme example shown in a TV documentary where the Camenan family — a male street sweeper, his housewife and their 22 children — struggles for survival.

The latest survey released by the Philippine Statistics Authority (PSA) showed that the average annual family income of Filipino families is PHP 411,350 (PHP 34,300 per month), while the average annual family expenditure is PHP 321,850 (about PHP 26,800 per month).

If all Filipino families were earning PHP 411,350, each family would have a savings of PHP 89,500 a year.

But that is not the case, since the average income constitutes the “median” income of the rich and the poor. If wealth were equally distributed, this might not be bad. But 90 percent of the country’s wealth is said to be in the hands of only 10 percent of the people. The poorest of the poor cannot eat three square meals a day.

By the way, most poor Filipino parents wallow in the mistaken notion that the more babies we make, the more we contribute to productivity. This belief is especially prevalent among farmers where parents expect their children to take over farm work.

An ideal family must only beget as many children as they can feed, clothe and send to school. A good education will assure them of better opportunities for success. Failure to do this would condemn future generations to a vicious cycle of poverty. Unfortunately, college education is now a luxury – no thanks to the Commission on Higher Education that authorizes tuition hikes yearly — beyond the rich of low-income parents.

I would not want to be pessimistic, however. I believe that, slowly but surely, our entrepreneurs are learning to exploit our natural resources to the hilt. The Guimaras mango, for example, has now a huge export market in Australia.

Interviewed on ANC TV, Professor Emily Cabegin of the University of the Philippines passionately begged her audience to patronize Philippine-made products.

She said, “We have to patronize local products. If we buy imports from China or Thailand, we help the laborers of China and Thailand. When we consume what they produce, they will be hiring more workers from their own countries.”