DOF expects 'weak to moderate' El Niño impact 

The Department of Finance (DOF) said El Niño is expected to have a weak to moderate effect on domestic food output and is unlikely to drag down the country’s growth potential this year. During the weekly Chat with SBED briefing, Finance Secretary Benjamin E. Diokno said that while El Niño is expected to persist up to the first three months of 2024, its impact on local production, especially for rice and corn, would not be significant. “The transition to El Niño is expected in the next months, with over 90 percent chance of persisting up to the 1Q 2024. However, most models show that the El Niño will be weak to moderate,” Diokno said. According to the DOF, the latest forecast indicated that most parts of the country will likely receive below-normal rainfall in October, with enhanced Southwest Monsoon highly likely, especially from July to August. Meanwhile, some areas in Visayas and Mindanao could experience early impacts of dry conditions or dry spell. In the agriculture sector, rice and corn would account for the bulk of production losses due to El Niño. However, Diokno said initial estimates showed that local rice production this year may just slightly decline by around 1.8 percent while yellow corn will be lowered by one percent. “There is also a minimal reduction in white corn production,” he said. “Production of onion and garlic is [also] expected to remain unchanged since they are typically grown in the first half of the year.” The finance chief also expects a negligible impact on pork and chicken production, while El Niño will be beneficial for the capture fisheries. “With the projected weak to moderate El Niño, we do not expect a significant reduction in local production especially for rice and corn,” Diokno said. With this projection, Diokno, said that the govenrment’s growth target of 6.0 percent to 7.0 percent for this year is achievable. However, Diokno admitted that the global economic outlook remains bleak with the International Monetary Fund and World Bank seeing global growth at 2.8 percent and 1.7 percent, respectively for 2023. “The downside risks include synchronized monetary tightening, fallout from recent deterioration in financial conditions, growing economic fragmentation, and continued Russia’s invasion of Ukraine,” Diokno said. In the first quarter, the Philippine gross domestic product (GDP) slowed to 6.4 percent from 8.0 percent a year earlier and 7.1 percent recorded in the final three months of 2022. The GDP performance was the country’s slowest growth pace in seven quarters or since the 12 percent in the second quarter of 2021.