(Bloomberg) -- The Philippines Department of Finance blamed analysts for "faulty" forecasts that drove up inflation expectations. Now some analysts are fighting back.
The fracas started on Sunday when the finance department issued a statement saying projections by analysts and economists from 13 institutions were “off the mark” by as much as 0.4 percentage points from the official inflation rates for January to November. It suggested the estimates were "weak".
“These forecasts have also driven inflation expectations that, as we know from global experience, have a tendency to become self-fulfilling prophecies,” Finance Undersecretary Karl Kendrick Chua said.
The response was swift. In a country where the central bank uses social media to communicate policy, the financial community isn't shy about challenging the official view on the same platforms.
Analysts were quick to point out that the government itself has had to revise its own forecasts for inflation, economic growth, and trade. Here's one from Nicky Franco, head of research at Abacus Securities Corp. from his personal account:
Journalists got into the act too. Here's a tweet from Ben O. de Vera from the Philippine Daily Inquirer:
Emilio Neri, lead economist at the Bank of the Philippine Islands, injected a dose of irony in his tweet which is not public: “And I thought Philvolcs was the only fault-finding agency in this Govt”. Philvolcs is the Philippine Institute of Volcanology and Seismology.
Surging prices have plagued the Philippines this year, forcing the central bank to raise interest rates 175 basis points since May, among the most aggressive increases in Asia this year. The pressure is starting to ease; inflation was 6 percent in November compared with 6.7 percent the previous month, which was the fastest pace since 2009.
To contact the reporter on this story: Ditas Lopez in Manila at dlopez55@bloomberg.net
To contact the editors responsible for this story: Stanley James at sjames8@bloomberg.net, Stephanie Phang, Karl Lester M. Yap
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