THE Philippines’s expected economic growth recovery in 2027 could face another hurdle if El Niño intensifies as projected, according to the Development Budget Coordination Committee (DBCC).
In its 2027 Fiscal Risks Statement, the DBCC identified intensified El Niño events among the downside risks to growth, noting that the weather phenomenon could be the strongest in 140 years and significantly affect agricultural productivity next year.
The DBCC earlier trimmed its growth target for 2026 to a range of 3.5 percent to 4.5 percent, from the previous 5 percent to 6 percent.
For 2027 to 2030, the government expects growth to recover to 5 percent to 6 percent, although this is lower than its earlier targets of 5.5 percent to 6.5 percent for 2027 and 6 percent to 7 percent for 2028.
‘Growth may further weaken’ if disruptions arising from strong El Niño events persist, alongside uncertainties over the fragile peace agreement between the US and Iran, and the lingering effects of recent corruption issues, the DBCC said.
The interagency body also noted that the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa) put the probability of the El Niño condition intensifying in the latter months of 2026 at more than 60 percent, with the phenomenon potentially continuing until early 2027.
The warming is expected to peak in the first quarter of 2027, according to the report.
The DBCC said the weather phenomenon could bring below-normal rainfall, prolonged dry conditions and above-normal temperatures, potentially affecting agriculture, water, energy and health.
It said the conditions could also contribute to heat-related illnesses, water shortages, lower agricultural productivity, and power supply constraints, requiring timely government intervention and additional resources.
Beyond its impact on growth and food supply, the DBCC said a severe El Niño could create broader fiscal pressures.
‘It will inevitably result in contraction in agricultural productivity, shrinking the tax base through direct production losses and indirect economic disruption,’ the DBCC explained.
The resulting increase in food inflation could also prompt the National Government to raise spending on emergency subsidies and social protection programs to stabilize prices and support rural workers, potentially reducing the fiscal space available to respond to other shocks, it added.
Beyond El Niño, the DBCC also flagged volatile global trade policies and geopolitical tensions as risks that could disrupt supply chains.
Higher-than-expected wage hikes, transport fare increases, and utility rate adjustments could also raise business costs, it said.
To limit the economic damage, the government plans to strengthen water and irrigation management and ensure a functioning flood-control system as part of its response to El Niño.
The Marcos administration should also strengthen disease surveillance and heat-health measures, preposition medical supplies, and intensify public information campaigns to address potential health and safety risks, the DBCC said.
According to DBCC, the National Government will continue monitoring developments related to El Niño and coordinating with relevant agencies to ensure that sectoral interventions are aligned and that the government is prepared to respond.