PH chief economist warns 'difficult months' ahead
At A Glance
- President Marcos' chief economist warned of the potential negative impact of a stronger-than-expected El Niño on consumer prices, signaling difficult months ahead for the public.<br>National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan stated that El Niño's effects will likely influence the prices of commonly consumed goods, ultimately impacting the country's overall economic performance next year.<br>Science Secretary Renato Solidum Jr. cautioned that the current El Niño may resemble the severe drought experienced during 1997 to 1998, causing extensive agricultural damage, with around 65 provinces expected to be affected by severe drought in the first half of 2024.<br>In response to the warnings, the NEDA Board, chaired by the president, will convene to discuss preparations for the challenging months ahead.<br>The government plans to closely monitor the impact of the El Niño phenomenon on food prices and ensure necessary interventions.<br>Additionally, the government is open to considering measures such as frontloading imports to stabilize commodity prices and ensure a stable supply.
President Marcos' chief economist has cautioned that the unexpectedly strong El Niño phenomenon is likely to impede progress in reducing consumer prices, warning the public of challenging months ahead.
National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan said that the adverse effects of El Niño would make everyday items more expensive, which will in turn affect the country’s economy next year.
“With respect to the effect on the economy, it will make an impact but it will channel more into prices because if food prices pick up then the gains that we have made in leaking inflation will be reversed and we don’t want that,” Balisacan said in a briefing on Wednesday, Dec. 13.
Last Tuesday, Department of Science and Technology (DOST) Secretary Renato Solidum Jr. warned that the ongoing El Niño could resemble the devastating drought of 1997 to 1998, which caused billions in agricultural losses.
Solidum projected that around 65 provinces will experience severe drought in the first half of 2024.
In light of the warning from the DOST chief, Balisacan said the NEDA Board, headed by the president, will convene on Thursday, Dec. 14, to address preparations for the upcoming "difficult months.”
The NEDA chief added that the government will have to carefully monitor the effects of the El Niño phenomenon, particularly on food prices and ensure appropriate government actions.
“That’s why from the point of view of NEDA, we have to watch closely those prices to ensure that we are able to intervene and mobilize government policy tools effectively,” Balisacan said.
El Niño is a climate pattern that occurs when the ocean surface temperatures in the central and eastern Pacific Ocean become warmer than usual, which can lead to changes in rainfall, temperature, and weather conditions.
In order to secure a steady supply in the country, Balisacan said the government is open to urging traders to expedite imports of key commodities to help stabilize prices.
“Definitely, the time to store is now so if such storage happen early we could moderate the increases in prices next year,” Balisacan said.
Inflation started the year at stubbornly high levels due to supply constraints. However, recent government interventions have helped to slow the rate of increase in consumer prices in recent months.
In November, the country’s headline inflation declined to 4.1 percent, which brought the average rate to 6.2 percent, still above the central bank’s two percent to four percent target.
The country’s economy rate, as measured by gross domestic product, was recorded at 5.5 percent from January to September. The economy will need to grow 7.2 percent for the fourth quarter to attain the low end of the target.