NEDA: El Niño biggest threat to Q3 growth


The negative impact of El Niño on agriculture is the biggest threat to the Philippine economy in the third quarter of this year, the National Economic and Development Authority (NEDA) warned.

Economic Planning Secretary Arsenio Balisacan said the government continues to hope for a much improved performance by the economy in the third quarter compared with the first two quarters of this year, but that the dry weather conditions caused by he El Niño phenomenon pose the greatest downside risk to growth.

The Philippine economy grew 5.3 percent in the first half of 2015, based on the slower-than-expected rate of expansion in gross domestic product (GDP) of 5.0 percent in the first quarter and 5.6 percent in the second. The first-half GDP rate stands lower than the 6.2 percent achieved a year earlier and below the government’s 7 percent to 8 percent target range for the full year.

“I hope that the third quarter is much better but the downside risk is El Niño,” Balisacan, who is also the NEDA director general, told reporters on the sidelines of the Asia Pacific Economic Cooperation meetings in Cebu late last week.

If the government weather bureau’s forecast that El Niño this year is going to be as strong as it was in 1997 to 1998, then the agriculture sector is bound to be affected the most, Balisacan said.

The Philippine Atmospheric, Geophysical, and Astronomical Services Administration had warned that El Niño was going to intensify in August, as it did, from weak to moderate, and persist until December before weakening gradually by early 2016.

Balisacan recalled that when El Niño hit the country in 1997-1998, “growth of the agriculture sector dropped . . . ,” he said, referring to the 8 to 10-percentage point contraction in agriculture output during the period.

The NEDA head, however, said the government could still mitigate the negative impact, though not completely, of the weather phenomenon on the sector by employing the right interventions and technology.

The agency is now spearheading the efforts of the government task force against the effects of El Nino, having started drafting the “Roadmap to Address the Impact of El Nino,” which includes interventions such as crop and/or work substitution programs.

“To mitigate the impact, we are looking at various areas, commodities, and sectors to implement various interventions,” he said.

Programs that could help the affected agriculture-dependent households who do not have other sources are also being implemented, he said.

“You have to have programs for them. We have introduced the Conditional Cash Transfer (CCT) program. This time we will also use the period to build irrigation canals so that when the rain comes, next time they’ll have better irrigation systems,” Balisacan added.


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