Freeman Cebu Business

Economist: El Niño to hit Philippines hard

Ehda M. Dagooc - The Freeman

CEBU, Philippines — An economist has warned of another calamity that may hit the Philippines, following the scientists’ prediction that there is a 56 percent possibility that the largest El Niño phenomenon may hit the country this year.

In an economic briefing hosted by the Mandaue Chamber of Commerce and Industry (MCCI), renowned economist Ronilo Balbeiran said if this happens, the Philippines stands to suffer another economic blow, “this is our biggest risk.”

Balbeiran urged both businessmen, and the government to remain vigilant, as any oversight could potentially undermine the ongoing recovery of the economy from the adverse impacts of the COVID-19 pandemic.

In addition to the well-documented water shortage issues resulting from prolonged dry spells, there is a looming concern regarding food production. Balbeiran cautioned that if El Niño occurs, the agricultural sector is expected to face exacerbated challenges.

According to Balbeiran, extreme weather events, such as El Niño, have the potential to disrupt the production of rain-dependent agricultural commodities, ultimately triggering an escalation in food prices and inflation.

Aside from political instability, calamitous events like El Niño have the potential to plunge the country’s economy into negative territory.

“Everybody is on alert mode now,” remarked Belbeiran referencing the recent water infrastructure summit in Manila. During this event, he said government agencies and private sector participants engaged in discussions aimed at expediting the implementation of water projects, irrigation initiatives, and other related developments.

In 2023, the Philippines grew 5.6 percent, missing the target of six to seven percent caused by the high inflation rate and rising interest rates. He said if the government was able to spend more in 2023, the country could have grown better.

The slower-than-expected growth in 2023, Balbeiran reiterated, is pulled down by the government’s under-spending posture.

In 2024, the government aims for a growth rate ranging between 6.5 percent to 7.5 percent. Balbeiran expressed confidence in the achievability of this target, emphasizing that it hinges on increased government spending throughout the year and the mitigation of risks such as the potential occurrence of El Niño.

“We still have a 44 percent chance that El Niño will not happen,” Balbeiran said but continued to remind businesses, the government, and the public to prepare for the long dry spell.

The Philippines projects inflation to settle between two to four percent in 2024. This target is achievable given that triggers like high transport cost, expensive power rates, higher fuel prices, and food prices will stay stable.

However, should El Niño impact the country, there is an expected surge in food prices, potentially leading to the failure of meeting the inflation targets once again.

In an earlier report, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa-Visayas) stated that Cebu and other 10 provinces in the Visayas are feeling the effects on the ongoing El Niño.

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