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Manila Bulletin devider Business devider DOF: PH economy to withstand El Niño impact

DOF: PH economy to withstand El Niño impact

Published Jan 2, 2024 08:56 am

At A Glance

  •  The Department of Finance (DOF) assures that the economy is prepared to withstand the potential negative impacts of this year's El Niño phenomenon, with the 2024 GDP target accounting for the risks associated with the prolonged dry spell.<br>Growth in 2024 is expected to be driven by private consumption, with an expectation of inflation returning within the target range of 2.0 percent to 4.0 percent.<br>Efforts to mitigate the expected impact of the prolonged dry spell on food production have been initiated by the Department of Agriculture and other agencies.<br>National Economic and Development Authority Secretary Arsenio Balisacan downplays the potential negative effects of El Niño on the economy, while acknowledging the likelihood of an increase in commodity prices, citing the smaller relative share of agriculture in the current economy compared to the severe El Niño of 1997-1998.<br> Additionally, the DOF emphasizes the economy's resilience to various challenges, including the global economic slowdown, natural disasters, and geopolitical and trade tensions, demonstrating a proactive approach in preparing for a range of economic challenges.

The Department of Finance (DOF) said the Philippine economy is prepared to withstand any potential negative impacts of this year's El Niño phenomenon.

In a statement, the DOF said that the national government's 2024 gross domestic product (GDP) target of 6.5 percent to 7.5 percent has already taken into account the risks associated with the prolonged dry spell.

The DOF explained that growth in 2024 will be fueled by private consumption, with expectations that inflation will return within the target range of 2.0 percent to 4.0 percent.

Last week, the Department of Agriculture and other agencies began taking steps to lessen the impact of the expected long dry spell on food production.

National Economic and Development Authority Secretary Arsenio Balisacan also downplayed the potential negative effects of El Niño on the economy but admitted the likelihood of an increase in commodity prices.

Balisacan cited the significant difference from the severe El Niño of 1997-1998, noting that the current relative share of agriculture in the economy is much smaller, at around 10 percent.

In addition to El Niño, the DOF added that the economy is capable of withstanding the global economic slowdown, other natural disasters, as well as geopolitical and trade tensions.

The DOF cited several favorable factors that would drive growth this year.

These include declining oil prices, strong public spending, increased investments attracted by the country’s solid macroeconomic fundamentals and investment-grade credit ratings, the implementation of structural reforms, and rising demand for Philippine exports as supply chain bottlenecks ease.

“A broad-based expansion in all major sectors of the economy led by services, and industry is expected to drive growth on the supply side,” the DOF said.

“The passage of proposed legislative reforms will also help ensure the funding for the P5.77 trillion national government budget for 2024 and will allow the attainment of the deficit target of 5.1 percent of GDP in 2024,” it added.

Meanwhile, Finance Secretary Benjamin E. Diokno said he economic team will continue to work with Congress in pushing for key reforms crucial to accelerating economic development.

Related Tags

Department of Finance (DOF) gross domestic product (GDP) El Niño
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