Call it what it is

In August, the economic managers brushed off the word “stagflation,” with Economy, Planning and Development Secretary Arsenio Balisacan noting that growth still outpaced the rate at which the population was growing. For his part, Bangko Sentral ng Pilipinas Governor Eli Remolona said the term usually implied a contraction.

And then, at a Monday, 9 November briefing in Hong Kong, Citigroup Global Head of Emerging Market Economics and Chief Asia Economist Johanna Chua said what Malacañang would not.

Citing October inflation at 7.8 percent against a 2-4 percent target, third-quarter growth at a post-pandemic low of 2.1 percent, and unemployment at 5.4 percent, up from 3.8 percent a year ago, Chua said what the government had long ruled out: “Obviously, by that definition, you can call it stagnation.”

Stagflation is the toxic mix of stagnant output, rising joblessness and rising prices. It defeats the usual playbook. Raising interest rates to tame prices further chills growth, while stimulus risks feeding inflation.

The government will blame oil and Iran, and those matter, but critics ask why a shock from abroad hits the Philippines so hard.

Look at the facts: the fifth straight quarter of slowing growth, with the Philippine Statistics Authority pointing to a sharp contraction in government construction. That is no foreign import. It is what happens when the flood control scandal freezes projects, scares officials and sends contractors scrambling.

Public spending was meant to be the growth engine, and the administration’s own corruption scandal stalled it. Energy vulnerability is likewise a policy failure built over years: the mix, the system losses, the thin buffers.

Is the President in sync with his team? No outsider knows what is said behind closed doors, but the public record is unflattering. In August, the economic managers said there was no problem. By October, the BSP surprised the market with a 50-basis-point hike, which Chua herself called a reassertion of central bank independence.

If Mr. Marcos wasn’t told how serious things were, his team failed him. If he was told and the response was this, the failure is his. Either way, a President claiming mastery of the economy should be able to lay out the options: sharper spending priorities, targeted relief for transport and power costs, faster, cleaner release of infrastructure funds. Instead, we have the sordid spectacle of a 2027 proposed budget dogged by pork allegations.

The pain is concrete. Fares, electricity and rent consume wages that haven’t grown. About 2.86 million Filipinos are jobless, nearly a million more than a year ago.

SMEs, the backbone of Philippine business, face a vise: weaker customers, costlier power and transport, and borrowing costs heading higher. Citi expects the policy rate to rise from 5.5 to 6 percent. Thin-margin firms cut hours, then staff, then shut down altogether.

How long will this last? Citi sees growth rebounding to 5.8 percent in 2027, but only if Middle East tensions ease, public investment picks up and price pressures fade. Only one of those is in the President’s hands. Citi doesn’t expect an easing until 2028.

Realistically, 2027 will be a year of endurance, not a guaranteed recovery. Citi’s 5.8 percent depends on conditions Mr. Marcos doesn’t control and one that he does: whether money moves through clean projects and the flood control prosecutions reach the powerful.

Defenders will say, as Citi Philippines CEO and country head Paul Favila did, that much of this is external, and that the construction slump is the price of cleaning house. Perhaps. But it is households and SMEs paying that price, not the officials who presided over the mess.

A President can blame Iran for oil. He cannot blame Iran for a stalled public works program, a 2027 budget riddled with pork allegations or a team that waved off the word “stagflation.”

When the word finally came from Citi, not Malacañang, the damage had already reached the dinner table.