Temperature shocks pose threat to PH economic growth
MANILA, Philippines — Worsening temperature shocks in the Philippines could hurt the country’s economic output growth, the Bangko Sentral ng Pilipinas (BSP) warned.
A discussion paper from the BSP showed that, on the average, a 1-degree Celsius increase in the country’s annual mean temperature could slash aggregate economic output growth by 0.37 percentage points in the long-term.
The paper stressed that vulnerability would be heightened in case of severe drought conditions, such as those induced by the El Niño weather phenomenon, where output could plummet by 0.47 percentage points.
This underscores the urgent need for the government to prioritize investment in the agriculture sector to solidify its role as a reliable engine of growth.
READ: PH among nations most at risk to El Niño
The BSP said the discussion paper was the first in the country to quantify the impact of rising temperatures on economic output. It is also the first to measure the impact of temperature shocks on various segments of economic activity.
The BSP study was written by Jean Christine Armas, Ranelle Jasmin Asi, Dyan Rose Mandap and Gabrielle Roanne Moral.
Farm output, industry, labor productivity
On crop production, the BSP study found that a 1-degree Celsius rise in annual average temperatures could cut the production of palay and corn by 1.83 and 3.51 percentage points, respectively. However, mango production—which is typically robust during the warm season—could benefit from light amount of rainfall.
The impact of warmer temperatures on the farm sector and the resulting decline in output could push up food prices and lift the country’s headline inflation rate by 0.77 percentage points, the paper said.
READ: BSP braces for El Niño impact
Outside agriculture, local manufacturing output could fall by 1.8 percentage points due to the potential impact of high temperatures’ on labor productivity, while the services sector’s output may fall by 0.7 percentage points, the BSP said.
“Given the significant contribution of the agriculture sector to total economic output of the country… it is crucial for the country to go through a paradigm shift—from being commodity-driven to taking a holistic agricultural system approach,” the central bank said.
