Connect with us

Hi, what are you looking for?


PHL vulnerable to inflationary pressures induced by El Niño

THE PHILIPPINES is expected to be one of the most vulnerable economies to El Niño-induced inflationary pressures in Southeast Asia, according to BMI Country Risk & Industry Research.

In the BMI Southeast Asia El Niño Exposure Index, the Philippines ranked sixth most vulnerable among 13 countries after Myanmar, Cambodia, Nepal, Laos and Malaysia.

“(The Philippines is) not the most impacted, but it’s certainly one of the bigger economies that will be impacted. So typically, the smaller economies are impacted more because they have a much higher share of agriculture as a share of (gross domestic product),” BMI Managing Director Cedric Chehab said in a webinar on Tuesday.

“The Philippines is a little bit more diversified than some of the smaller ones. But the Philippines also has a vulnerability (to El Niño).”

The BMI index analyzes the impact of El Niño on agriculture, rice production, consumption and imports, among others, based on previous El Niño events.

Myanmar (0.67), Cambodia (0.61), and Nepal (0.60) were the top three markets most exposed to El Niño-induced inflationary pressures and were subjected to upside interest rate risks.

On the other hand, China, Vietnam and Thailand appeared the most resilient to the potential agricultural impact of El Niño.

“For most markets, El Nio, via the causal channel of commodity prices, is associated with short-run inflationary pressures. For Southeast Asia, the heating associated with El Nio events is accompanied by reduced rainfall, relative to normal conditions, which has particular implications for the water-intensive cultivation of rice, the staple food item across much of the region,” BMI said.

Last week, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) announced the onset of the El Niño weather pattern. PAGASA projections have shown a high probability of more than 56% chance that El Niño will be moderate to strong during the last quarter of this year.

A strong El Niño is expected to weigh on the Philippine economy, as agriculture usually contributes around a 10th to the Philippines’ overall gross domestic product (GDP).

The Philippines has also been improving in self-sufficiency in rice production and consumption, but the El Niño event in 2015 to 2016 has affected its progress, according to Mr. Chehab.

“The El Niño back then was quite tough and actually hit the Philippines more aggressively than other economies with rice production falling by about 10% at the time, compared to trend. So from a production perspective, the Philippines was hit relatively strongly there,” he said.

Agricultural output declined by 1.5% in 2016 amid a strong El Niño event.

In 2019, another El Niño weather event hit the Philippines, with agricultural damage reaching up to P8 billion.

“So I think that’s certainly an area to watch, in terms of upside risk to inflation in the Philippines,” Mr. Chehab said. “The risks to inflation and interest rates are to the upside based on those dynamics, and also potentially as a little bit of a downside risk in terms of agricultural output.”

National Economic and Development Authority Secretary Arsenio M. Balisacan earlier said that a “slight El Niño” could cause agricultural production to decline by 1-2%.

The Philippines experienced its worst El Niño episode in 1998, when the economy contracted by 0.5% as agricultural production fell by 7%. — K.B.Ta-asan

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the daily email that makes reading the news actually enjoyable. Stay informed and entertained, for free.
Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!



By Luisa Maria Jacinta C. Jocson, Reporter THE NATIONAL Government’s (NG) budget deficit widened to P133 billion in August as revenues declined, data from...


THE GOVERNMENT is planning to launch US dollar-denominated retail Treasury bonds (RTB) on Tuesday, Finance Secretary Benjamin E. Diokno said. “We will launch the...


By Keisha B. Ta-asan, Reporter SUPPLY SHOCKS to inflation and a weaker peso against the dollar may prompt the Bangko Sentral ng Pilipinas (BSP)...


By Bernadette Therese M. Gadon, Researcher THE PHILIPPINES’ largest banks saw asset and loan growth ease in the second quarter, reflecting the impact of...


PROJECTS and activities to be funded via the issuance of “blue bonds” should support specific items under the United Nations Sustainable Development Goals (UN...


1 of 5 VERSACE TOM FORD PRADA EMPORIO ARMANI FENDI MILAN — Italian luxury label Dolce & Gabbana (D&G) presented a mainly black and...

You May Also Like

Top News

As the world seeks sustainable and energy-efficient solutions for heating and cooling, the heat pump market is experiencing a significant surge. According to the...


The Toto site’s user-friendly interface makes it easy for both beginners and experienced gamblers to navigate through the various features. “¸ÔÆ¢Æú¸®½º site is a...


Almost 100 jobs are thought to be under threat at smart home energy technology manufacturer myenergi. The Grimsby firm, named one of the UK’s...


The number of small businesses planning to increase prices to their customers is set to rise dramatically this quarter, further fuelling inflationary pressures. A new quarterly analysis of...

Disclaimer:, its managers, its employees, and assigns (collectively "The Company") do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2021 SmartRetirementReport. All Rights Reserved.