THE Marcos administration’s hoped-for economic recovery in the third quarter could be hampered by repeated weather disruptions that threaten activity in key sectors, according to economists.
The Department of Economy, Planning, and Development (DepDev) earlier said economic growth could improve in the third quarter on the expected rebound in public infrastructure spending, which could lift investment and overall economic activity.
However, University of Asia and the Pacific economist Marco C. Agonia said adverse weather remains a key risk to the recovery as it could delay projects and cause losses in major sectors such as construction, retail, and agriculture.
‘We see the recent string of bad weather as a headwind to the economy’s recovery narrative,’ Agonia told the BusinessMirror.
Agonia cited the fourth quarter of 2024, when consecutive super typhoons delayed infrastructure projects and damaged agriculture, contributing to the country’s failure to meet its initial full-year growth target.
Growth during the period was around 0.3 to 0.5 percentage points lower than anticipated, highlighting the economy’s continued vulnerability to extreme weather.
The warning comes after the Philippine economy slowed to 2.3 percent in the second quarter, bringing first-half growth to an average of 2.6 percent, significantly lower than the 5.4 percent recorded in the same period last year.
Ateneo de Manila University economist Ser K. Peña-Reyes agreed that the weather could weaken the recovery, although a few localized disruptions may have only a modest impact as reconstruction and catch-up activity could later offset some of the losses.
‘Repeated flooding across major agricultural and economic corridors could prevent the Q3 rebound from gaining traction,’ Peña-Reyes told the BusinessMirror.
Peña-Reyes said agriculture and food supply would likely feel the most immediate impact, as flooding could damage crops, livestock, and fisheries, and disrupt harvesting and transport.
He noted that agriculture expanded by 2.7 percent quarter-on-quarter in the second quarter, while Central Luzon and Cagayan Valley accounted for a combined 49.5 percent of palay production during the period.
Beyond agriculture, Peña-Reyes said flooded roads, ports, and airports could disrupt retail, logistics, and tourism, and prevent workers from reporting for work.
He added that floods and landslides may delay construction projects and force the government to redirect funds from planned infrastructure to emergency relief and rehabilitation.
Spending, investment under pressure
The effects of adverse weather could also extend to household spending and private investment, according to economists.
Agonia said reduced mobility could weaken consumption as fewer customers visit businesses.
‘Beyond the damage to human lives, this was rain on the economic parade,’ he added.
Data from the Philippine Statistics Authority (PSA) showed household consumption grew by only 2.8 percent in the second quarter, the slowest since spending contracted by 4.8 percent in the first quarter of 2021.
Excluding the pandemic period, this was the weakest household spending growth since the third quarter of 2010, when it expanded by 2.6 percent.
Peña-Reyes said weather disruptions could have mixed effects on consumption. Relief spending and purchases to replace damaged goods may temporarily support demand, but affected households could become more cautious as damage to their homes, farms or businesses reduces their disposable income.
Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said food prices pose a greater concern, as heavy rains and flooding could damage crops, delay harvests and raise transport costs.
‘If disruptions persist, they can slow the recent easing in inflation, particularly for vegetables, rice, and other perishables,’ Rivera told the BusinessMirror.
Peña-Reyes added that prolonged disruptions could also prompt firms to postpone investments amid uncertainty over infrastructure, supply chains and operating conditions.
‘This would be especially problematic given that weak investment has already been one of the constraints on Philippine growth,’ he said.
Growth target still within reach
Despite the cumulative impact of weather disruptions, Rivera said the government’s full-year growth target remains attainable.
The government expects the economy to grow by 3.5 percent to 4.5 percent this year. DepDev earlier said growth must average 4.4 percent in the second half to reach the lower end of that target.
‘The outcome will depend on how quickly activity normalizes and whether infrastructure spending, exports, and private investment strengthen enough to offset temporary disruptions,’ Rivera said.
He noted that the Development Budget Coordination Committee (DBCC) had already factored in heightened domestic and external uncertainties into its revised 2026 growth target.