Risk of economic contraction lingers with El Niño’s return

THE Philippines’ weak economic growth may persist until the first semester of the year because of the El Niño phenomenon, according to economists.

Benjamin Diokno, former Budget secretary during the Estrada administration, which endured the confluence of an extreme dry spell and the Asian financial crisis during the late 1990s, said El Niño might dampen economic growth.

He said the dry spell could cut by half the country’s agriculture output during the first half of the year.

However, he said that the impact would depend on the severity of El Niño—how long and which areas will be affected.

“El Niño could result in zero GDP [gross domestic product] growth to slight contraction during the first semester,” he added.

Acting Socioeconomic Planning Secretary Augusto Santos agreed, saying that the El Niño forecast of the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa) points to the possibility of a “water crisis.”

“It would affect [the economy] because in terms of value, agriculture is one third of the economy and if agriculture production goes down because of El Niño, then it would affect GDP,” Santos said.

GDP is the amount of final goods and services produced in a country.

In 1998, Philippine GDP contracted by 0.6 percent because of an El Niño episode and the Asian financial crisis.

Back then, the El Niño damaged 2.5 million metric tons of crops over an area of more than a million hectares for an aggregate amount of P8.3 billion.

Pagasa earlier reported that the current El Niño is expected to persist until March and will likely influence the country’s climate through the first half of the year.

The weather bureau said the dry spell condition was observed as early as September in areas of Capiz, Northern Samar, Masbate and Oriental Mindoro.

Other areas that suffered extreme dry conditions were Benguet, Bulacan, Nueva Ecija, Pampanga, Batangas, Aurora, Quezon, Marinduque, Mindoro, Romblon, Sorsogon, Camarines Norte, Camarines Sur, Northern Samar, Aklan, Guimaras, Biliran, Davao del Sur, South Cotabato, Sarangani and Sultan Kudarat.

Because of the El Niño, the water level in Angat dam, which supplies 97 percent of Metro Manila’s water, dropped to 201.43 meters as of January 13 from the normal level of 212 meters.

If the water level continues to fall, the Metropolitan Waterworks and Sewerage System said it would ask the National Water Resources Board to stop allocating water to the National Irrigation Administration for the irrigation of farms, particularly in Bulacan and Pampanga.

Both provinces are located at the heart of the country’s rice granary. –DARWIN G. AMOJELAR Senior Reporter, Manila Times