Despite the string of strong typhoons that battered economically-productive parts of the Philippines so far in the third quarter, the country's chief economist still expects to hit the targeted economic expansion for 2024.
"We're confident we'll achieve our six- to seven-percent growth target this year despite the recent typhoons," National Economic and Development Authority (NEDA) Secretary Arsenio M. Balisacan told Manila Bulletin on Wednesday, Sept. 11. Real gross domestic product (GDP) grew by an average of six percent in the first half of the year.
The Department of Agriculture (DA) earlier reported that the combo of super-typhoon "Carina" and southwest monsoon or "habagat" last July inflicted P4.73 billion in damage to the agriculture sector.
The agricultural losses caused by tropical storm "Enteng" early this month, meanwhile, amounted to P2.26 billion so far, according to the DA.
For Balisacan, "the recent fall in inflation and policy rates and the robust labor market are expected to buoy domestic demand."
Headline inflation fell to a seven-month low of 3.3 percent in August as food price hikes, especially of Filipino staple rice, eased.
As inflation returns to the range deemed manageable and conducive to economic growth, the Bangko Sentral ng Pilipinas (BSP) started its easing cycle and cut the key interest rate by 25 basis points (bps) to 6.25 percent last month.
The jobless rate declined to 4.7 percent in July from 4.9 percent a year ago, although higher than June's record-low 3.1 percent.
In a presentation at the 22nd International CEO Conference last Tuesday, Sept. 10, World Bank lead economist for Brunei, Malaysia, the Philippines and Thailand Gonzalo Varela said the threat of climate change is becoming a reality in the country.
Varela told members of the Management Association of the Philippines (MAP) that the Philippines should be able to adapt to climate change by putting in place shared "resilient infrastructure," something that Balisacan said the government was already doing.
"Resiliency is one of the considerations or standards for our 'Build Better More' infrastructure program," Balisacan said in a text message.
The NEDA chief was referring to the rollout of 186 infrastructure flagship projects in the medium- to long-term, with the government intending to spend P1.47 trillion, equivalent to 5.6 percent of GDP, on hard infra this year.
Varela noted that the Philippines is No. 1 in disaster risk globally and fourth-most affected by weather events, such that 82.7 percent of Filipinos are exposed and 69.1 percent vulnerable to climate change impacts, citing the World Bank's Philippines Climate Change Development Report in 2023.
World Bank estimates showed that extreme weather and rising temperatures would slash the Philippines' real GDP by four percent under a low to moderate climate scenario, and as much as 11 percent under a more severe climate scenario.
The private sector is also badly affected by weather risks, as Varela pointed out that most firms in the country are exposed to severe flooding, while businesses mainly in western Luzon island face elevated risks of drought.
It did not help that the flood risk in Metro Manila, the country's main business and economic hub, has risen by 40 percent during the last six decades, Varela added.
Citing that companies’ decisions as well as performance get affected by weather risks, Varela said both manufacturers and services firms are facing bigger chances of relocation from flood-prone areas to other parts of the country with reduced precipitation.
"Increased precipitation reduces productivity, sales and investment for services firms," Varela noted.