The Philippine economy is possible strong face the decline in prices and slow growth as typhoons are common and strong Chains and farm production, says the International Monetary Fund (IMF).
“The Philippines is highly exposed to natural hazards, especially typhoons, which are the most frequent and costliest weather events in the country,” the IMF Regional Office for Asia and the Pacific said in a Facebook post. “These events represent supply shocks, creating price pressures and reducing economic activity.”
The IMF estimated that the category 5 typhoon could raise the intensity of the head by 0.4% point (PPT) and the increase in food prices by 0.7 ppt, based on the regional data in consultation with its recent IP consultation with Manila.
Super Typhoon Ragasa, from a place called Nando, was another such typhoon that hit the country last month, causing floods and the first P1.38 billion in agricultural damage.
Data from the Department of Agriculture revealed that the western Monsoon and typhoons Mirasol, Nando and Oppong caused P7.71 billion in combined losses. Farmers and fishermen lost 472,701 metric tons in production and 205,016 hectares in farmland.
The IMF said that such a climate shock could reduce the productivity of agricultural workers by as much as 2.5% and deprive economic growth of 0.4 ppt off, with an estimated damage of 0.2% to 0.3% of the gross domestic product (GDP).
Inflation accelerated to 1.7% in September from 1.5% in August, the fastest in six months, the Philippine Statistics Authority said. While slower than 1.9% a year earlier, the pickup showed higher food prices after the recent storms.
The agency said vegetable prices rose 19.4% in September, up from 10% in August – the steepest increase since January. Food inflation rose to 0.8% from 0.6% last month.
Inflation this year stands at 1.7%, compared to the bangko sentral ng pipipinas’ (BSP) target for the full year but above the IMF forecast of 1.6%.
The economy expanded by 5.4% in the first quarter, slower than the previous 6.2% but in line with the IMF’s overall outlook.
Economic Secretary Arsenio M. Balisacan said that growth may soften further in the third quarter due to typhoon-related disruptions due to typhoon-related disruptions but still able to meet the target of 6.5% low to 6.5%. The third GDP data will be released on November 7.
The IMF said that financial managers should carefully balance inflation control with the need to support growth after natural disasters. “Post-crisis wealth, monetary policy should aim for a careful trade-off between inflating inflation expectations and supporting economic recovery,” it said.
The BSP delivered its fourth straight rate cut of 25 basis points and reduced borrowing costs by 175 bps from August 2024.
“Fiscal policy is the basis for building climate resilience before disasters strike, to help mitigate the major impact of natural disasters,” the IMF added. – Katherine K. Chan
