The National Government's efforts to implement preemptive measures against the looming "Super El Niño" could cushion the economy despite its vulnerability to weather disruptions.
According to a recent report, stronger early preparedness frameworks will keep the overall macroeconomic impact in Asia manageable. Measures such as shifting to water-efficient crops, maintaining higher grain reserves, and improved water management, along with a declining role of agriculture, can buffer the fallout from a severe El Niño event.
The Department of Agriculture is working with farmers to adjust planting timelines, shift to less water-intensive crops, proactively plan irrigation, and enact water-saving measures. Local farm production contracted in the first quarter, as a decline in crops and fisheries dragged the total output down by 0.3%. Second-quarter agricultural production data will be released on Thursday.
The Philippines' rice, sugarcane, and coconut crops will likely bear the brunt of El Niño. Economies in South and Southeast Asia, including the Philippines, are among the most vulnerable to the looming El Niño phenomenon.
The Philippine Atmospheric, Geophysical and Astronomical Services Administration expects the Philippines to encounter a strong El Niño season by the third quarter, which could intensify into "very strong" conditions by October until January next year. Such extreme weather conditions could imperil the local agricultural sector, likely resulting in higher food and electricity prices across the country.
Food prices are spiking in economies such as the Philippines, India, Vietnam, and Indonesia. Households in these countries are more vulnerable to further weather-related supply shocks. The Philippines had the fastest headline and food inflation in June among select Asia-Pacific economies, exceeding India, Vietnam, Indonesia, Malaysia, and Thailand.
The country's reliance on hydropower generation makes it vulnerable to disruptions. Hydropower accounts for 9% of the country's total electricity generation, lower than Vietnam's 30% and Malaysia's 19% but higher than Indonesia and India with 7% each and Thailand with 3.5%.
Despite the challenges, economies in Asia-Pacific are in a relatively better position to weather the upcoming El Niño event than in previous years. Early preparedness efforts will help to buffer the impact of rainfall disruption, and the overall macroeconomic impact in Asia is expected to remain manageable.
