The growth forecast is based on the expectation that inflation will ease, thus strengthening household purchasing power. Growth is expected to benefit from the government's commitment to shore up public investment, with public investment plans averaging 5.7 per cent of GDP from 2024 to 2026, including 124 new flagship infrastructure projects, the report stated.

However, higher than expected inflation, extreme weather and climate change, global geopolitical tensions, tighter than expected financial conditions, and the possibility of a sharper slowdown in China pose risks to the growth outlook. A prolonged El Nino event, and possibly a La Niña, could strain the domestic food supply and trigger an increase in inflation.

The Philippines needs to intensify steps to bolster community resilience against the effects of climate change and extreme weather to minimise economic disruption and sustain inclusive growth, as per the report. In addition, the government needs to improve the efficiency, transparency, and inclusive use of public resources in climate adaptation, mitigation, response, and rehabilitation.

"The current El Nino phenomenon exemplifies the severe disruptions that extreme weather events, intensified by climate change, can cause,” said World Bank country director for Brunei, Malaysia, the Philippines, and Thailand Ndiame Diop. “These disruptions include impacts on educational services, reductions in farm yields, and constraints on water and electricity supplies. Proactive measures to bolster community resilience against such climatic challenges are crucial and can significantly mitigate their adverse effects on the country's growth outlook."

“To manage inflation, the continued implementation of non-monetary strategies is essential, including efforts to optimise supply and demand management and to secure timely and adequate imports of staple food items,” said World Bank senior economist Ralph Van Doorn. “The government needs to continue providing social assistance to vulnerable groups who are disproportionately affected by high food inflation.”

In September 2023, the government launched the El Nino National Action Plan focusing on building resilience in water, agriculture, electricity, health, and public safety. To effectively manage the impacts of El Nino, a climate pattern produced by warming oceans, the government has implemented strategic measures, including financial assistance to rice farmers, fuel subsidies for farmers and fishers, and allocations for insurance claims and credit assistance for affected farmers and fishers.

The report also emphasises the importance of enhancing revenue collection to sustainably finance the country's development priorities. Achieving the Philippines’ fiscal targets by 2028 and sustainably financing the government’s development priorities will rely on more robust tax revenues.

Additional revenue efforts could focus on broadening the tax base, rationalising tax incentives, strengthening tax administration, and improving collection efficiency. Fiscal consolidation could help preserve confidence in the economy, leading to an increase in private investment and productivity, and would lead to sustainable increases in public investment in infrastructure, health, and education.

Fibre2Fashion News Desk (RR)