Jenina P. Ibañez, Reporter
MANILA is the 78th most expensive city for expatriates to live in according to Mercer’s 2021 Cost of Living Survey, as the Philippines’ capital city jumped two spots from the previous year’s ranking.
Manila tied with Mumbai, India at 78th out of 209 cities in the Mercer survey that compares the costs of 200 items in each location, including housing, transportation, food, clothing, household goods, and entertainment.
Julia Radchenko, Mercer Asia Pacific Global Mobility Leader, said that the Philippines’ rise in ranking was due to the Philippine peso strengthening by 4% against the US dollar this year.
“It is also one of the few Asian currencies that has recorded gains versus the greenback, alongside the Chinese yuan and Taiwanese dollar,” she said in an e-mail to BusinessWorld on Tuesday.
“A fall in demand for imports due to a weaker economy as the country went through long and strict lockdowns to contain the virus has in turn strengthened the peso.”
More than half of the top 10 most expensive cities is in Asia. Ashgabat, Turkmenistan topped the list as the most expensive city, replacing Hong Kong which slipped to second spot. Beirut climbed 42 spots to third place, amid the economic crisis in Lebanon. Tokyo, Japan slipped to fourth place.
Shanghai came in sixth, while Beijing took the ninth spot, as the Chinese currency appreciated against the US dollar and the economy’s rebound from the pandemic.
Several cities in Switzerland also held the top spots, including Zurich (5th), Geneva (8th), and Bern (10th).
Among 42 Asia-Pacific countries in the survey, Manila is the 25th most expensive city, again tied with Mumbai.
“The survey saw a rise in rankings across all Mainland China cities, buoyed by currency appreciation against the US dollar and a swift recovery from the impact of COVID-19,” Mercer said.
Ms. Radchenko in a statement said that companies in the Asia-Pacific region are reassessing workforce mobility amid the pandemic.
“Companies are realizing more than ever that they need to diversify their mobility scenarios and related compensation practices. And it is no longer about just geographical mobility, it is about talent mobility which implies lateral moves, distributed workforce, geographical mobility, international remote working, virtual assignments,” she said.
“What we’ve seen is that companies are exercising more flexibility to accommodate the different personal situations of employees. Broadly speaking, companies are now more open to International remote working arrangements, allowing employers to perform the same role remotely as they would if they were to relocate.”
Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), said that Manila’s more expensive cost of living could be attributed to a relatively faster hike in real estate rental rates and capital values over the past few years.
Higher housing costs in developed countries also led to a spike in expatriate housing rates in the capital, he said in an e-mail, while a global oil price increase could have also added to transportations costs since the country imports all its oil needs.
“Relatively higher inflation recently also partly contributed to the recent increase in cost of living,” he said.
“However, the COVID-19 pandemic led to some healthy downward correction in the rental/lease rates as well as capital values of housing, after the rising trend in recent years/decades. The pandemic fundamentally reduced demand conditions that also led to some downward correction in the prices of some goods and services in the economy,” Mr. Ricafort added.
Inflation spiked earlier this year as prices of meat products rose due to a supply shortage. Year to date, headline inflation averaged 4.4% as of May, exceeding the central bank’s 2-4% target range.
The BSP expects inflation for 2021 to reach 3.9%.