El Niño hurts agri, water supply most

MANILA, Philippines – An Economic Intelligence Unit report warned of increasing power cuts and possible higher inflation rate as the El Niño phenomenon continues to hurt the Philippines’ power and agriculture sectors.

“Not only have water reservoirs been running dry, but the capital, Manila, has had to start rationing water intake in recent weeks,” the report stated.

EIU said the dry spell’s impact on electricity supply may be a bigger issue as 20 percent of the country’s power generation comes from hydroelectricity. This means a higher risk of facing power cuts in the main manufacturing hubs of Luzon.

Agricultural output especially rice and corn, meanwhile, has been reduced due to the dry spell.

“This may have a dampening effect on industrial production and boost inflationary pressures,” the report said.

The government has already formed an El Niño Task Force to outline and implement mitigating measures to deal with the heat and dry wave.

The National Economic and Development Authority (NEDA) said earlier it is asking the national government for a P19.2-billion budget to cope with El Niño and part of this will be used to import additional rice.

The EIU said that this El Niño phenomenon is stronger in comparison than what was experienced in the 1997-1998 period, the strongest since 1950. The El Niño felt in 1997-1998 had a large negative effect on agricultural output in Asia.

The likely effects of El Niño across Southeast Asia and the Pacific will differ substantially, but most areas will suffer from below-average rainfall, EIU said.

“This will have a significant economic impact on the agricultural commodity exporters of the region, as well as those economies that depend largely on agricultural output for subsistence,” the report read.