Climate change could cut PHL’s GDP by 18% by 2070

The Philippines could potentially lose 18.1% of its gross domestic product (GDP) by 2070 due to climate change under a high emissions scenario, the Asian Development Bank (ADB) said.

“In the Philippines, about half of losses come from sea level rise. And then, a larger share than at the regional average would come from natural resource-based sectors, so agriculture, fisheries, forestry,” David A. Raitzer, senior economist at the ADB’s Economic Research and Development Impact Department, said in a virtual briefing on Thursday.

In particular, the Philippines’ agriculture, forestry and fisheries sectors could suffer a combined 4.7% output loss by 2070 due to the impact of climate change, according to the ADB’s inaugural Asia-Pacific Climate Report.

The estimated loss in the Philippines’ natural resource-based sectors is higher than the 2.1% average loss across the Asia-Pacific, the ADB said.

The developing Asia-Pacific region could potentially suffer a 17% loss in its collective GDP by 2070 if high emissions continue. The losses could climb to as much as 41% of the region’s GDP by 2100.

Among Southeast Asian economies, Vietnam will experience the highest overall GDP loss due to climate change at 30.2% by 2070, followed by Indonesia (26.8%).

“These losses are far above prior model-based losses and are consistent with the upper bound of econometric estimates,” the ADB said in the report. “They also confirm that climate policy responses, including adaptation and mitigation, will be essential to the future welfare of the Asia and Pacific region.”

If climate change continues to worsen, the rising sea levels and storm surges will likely cause trillions of dollars’ worth of annual damage in the Asia-Pacific by 2070, ADB Principal Economist Yi Jiang said at a briefing.

Toru Kubo, senior director at the ADB’s Climate Change and Sustainable Development Department, said inhabited parts of the Asia-Pacific will be 4 to 8 degrees Celsius (°C) warmer within the century.

“Given that warmer air of 1°C can hold roughly 7% more water, that is approximately 30-50% more moisture in the atmosphere that comes crashing down when it hits cold air masses,” Mr. Kubo told the briefing.

“Our cities, the rivers, the drainage systems, the critical infrastructure for power, transport, water, food production systems, buildings and homes are not designed to cope with such extreme heat and sudden volumes of water.”

The Asia-Pacific region generates about half of the world’s greenhouse gas emissions. Many of its countries are signatories to the Paris Agreement, which seeks to limit the average global temperature to within 1.5°C.

“Climate change has supercharged the devastation from tropical storms, heat waves, and floods in the region, contributing to unprecedented economic challenges and human suffering,” ADB President Masatsugu Asakawa said in a statement.

“Urgent, well-coordinated climate action that addresses these impacts is needed before it is too late.”

Despite significant strides in reducing emissions intensity, and a 50% decrease across developing Asia since 2000, the region still produces nearly half of global greenhouse gas emissions.

Rapid production, rising energy demand and increased domestic consumption fueled the emissions rise over the past two decades, the ADB said, with China accounting for two-thirds of the increase. South Asia and Southeast Asia contributed 19.3% and 15.4%, respectively.

The energy sector is the region’s largest emitter, responsible for 77.6% of total emissions, driven by a heavy reliance on fossil fuels.

Left unchecked, these trends place developing Asia at the center of the climate crisis, both in terms of impacts from global warming and solutions, the ADB said.

“The window to stay within the 1.5°C target of the Paris Agreement is rapidly closing,” ADB said.

It urged countries to come up with more ambitious and large-scale mitigation action plans, accelerate the transition to net-zero emissions and scale up investments in advanced climate technologies and nature-based solutions.

Meanwhile, a majority of Filipinos identify climate change as a serious problem, according the ADB’s Climate Change Perception Survey mentioned in the report.

In a survey of 1,000 Filipino respondents, 90% believe climate change affects people now and in the next 10 years, while 86% of respondents said it affects their family now or within the next 10 years.

According to the survey, most Filipinos (71%) said they were most concerned about the impact of flooding, followed by heat waves (54%), unpredictable weather (46%), less productive agriculture/higher food prices/reduced food security (34%), and drought (21%).

More than half (59%) of Filipinos surveyed supported investments in low-emissions and resilient infrastructure, while 45% backed a carbon tax.

The survey was conducted online from July 8 to 31,. It surveyed 13,500 respondents across 14 Asian economies.

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Source: Business World and ADB

Asia lags behind pre-pandemic levels of food security

Hunger remains a chronic problem in Asia, with 55 million more people undernourished in 2022 than before the COVID-19 pandemic, the U.N. Food and Agriculture Organization says in its latest assessment of food security in the region.

Most of those living without enough to eat are in South Asia, and women tend to be less food secure than men, the report says.

The FAO’s study focuses on food supply, consumption and dietary energy needs and is designed to capture a state of chronic energy deprivation that stunts growth and saps productivity and quality of life.

The share of people in the region suffering from such undernourishment fell to 8.4 percent in 2022 from 8.8 percent the year before. But that’s higher than the 7.3 percent of people who were undernourished before the pandemic began, sending some economies into a tailspin and depriving millions of people of their livelihoods.

Natural disasters and disruptions to food supplies, often linked to climate change, have added to those pressures.

The FAO data show the share of people in the region facing moderate food insecurity, uncertain of their ability to obtain food and having to sometimes eat less or poorer food due to a lack of money, or those experiencing hunger that puts their well-being at serious risk, still hovers near 30 percent for the world and above 25 percent for Asia and the Pacific.

The problem is worst for women: more than one in five women in Asia, excluding East Asia, face moderate or severe food insecurity. The rates are slightly lower for men in most regions, but in Southern Asia the gap grows to more than 42 percent for women and more than 37% for men.

Higher food, fuel, fertilizer and livestock feed prices mean that progress has stagnated after the pandemic reversed a longstanding trend beginning in the early 2000s toward alleviation of hunger.

It’s a global problem, made worse by disruptions to supplies of grain, edible oil and fertilizer partly due to the war in Ukraine.

Worldwide, the number of people having precarious access to food rose to nearly 2.4 billion in 2022 from just over 1.6 billion in 2015, the report said.

In Africa, the United Nations says at least three of every four Africans can’t afford a healthy diet because of an “unprecedented food crisis.”

More than half of the 735 million people who are nourished worldwide live in the Asia-Pacific, most of them in South Asia. But North Korea has the largest regional share of people who are undernourished, the report says, at about 45 percent, followed by Afghanistan at 30 percent.

The world average for undernourishment is 9.2 percent, while in the Pacific islands of Oceania, excluding Australia and New Zealand, it was nearly 21 percent, or more than one in five people. In Southern Asia, about 16 percent of people are undernourished, the report says.

Source: Inquirer

Asia to keep fueling global growth – IMF

Asia's growth momentum is waning but the region remains a critical driver of worldwide economic expansion, the International Monetary Fund (IMF) said.

In its latest Regional Economic Outlook (REO) for Asia and Pacific, the Washington-based lender said that it expected regional growth to rise to 4.6 percent this year from 3.9 percent last year.

The 2023 forecast was unchanged from April but that for 2024 was lowered to 4.2 percent from 4.4 percent.

"Strong consumer spending has supported growth in Asia's three largest economies this year, but there are already signs that the region's recovery may be running out of steam," Asia-Pacific Department Director Krishna Srinivasan said in a briefing on Friday. "The region is facing challenges from persistent medium-term output losses and China's structural slowdown, geoeconomic fragmentation, and inflation," Srinivasan added.

"Our less-optimistic assessment is based on signs of slowing growth and investment in the third quarter, in part reflecting weaker external demand as the global economy slows, such as in Southeast Asia and Japan, and faltering real estate investment in China," he added.

China's economic recovery, the IMF said, is slowing down sooner than anticipated.

Growth is expected to hit 5 percent this year but drop to 4.2 percent next year due to a worsening property sector.

"The drag from China would historically have been offset by forecasts for faster growth in the United States and Japan, but the resulting boost is likely to be more muted this time," Srinivasan said.

"The strength of the US economy has been focused in the service sector, rather than in goods, which doesn't fuel greater demand for Asia," he added.

In the short term, Srinivasan said that significant changes in China's debt-laden property sector and the subsequent economic slowdown were likely to affect the region, especially countries that export commodities and have strong trade connections with China.

"An aging population and slowing productivity growth will further temper growth over the medium-term in China, amid rising risks of geoeconomic fragmentation, and bear upon prospects in the rest of Asia and beyond," he added.

Asian economies closely tied to China's economy could see a potential 10 percent output decrease over a five-year period.

Finance Secretary Benjamin Diokno has claimed that Philippine economic growth would be bolstered by domestic demand.

The IMF has lowered its outlook for Philippine growth to 5.3 percent for this year, down from 6.2 percent in July. It expects growth to pick up to 5.9 percent the following year, improving from the previous forecast of 5.5 percent.

Both forecasts fall below the government's 6.0- to 7.0-percent target for this year and the 6.5-8.0 percent for 2024 to 2028.

On a positive note, Srinivasan said that disinflation was on the whole progressing in Asia.

Still, he said "the global environment remains highly uncertain, and while risks to the outlook are more balanced than they were six months ago, Asia's policymakers must stay the course to ensure continued growth and stability."

"A sudden tightening of global financial conditions could lead to capital outflows and put pressure on Asia's exchange rates that would threaten the disinflation process," he added.

Countries like Australia, New Zealand, and the Philippines, where inflation remains above targets, should continue to show their dedication to lowering inflation.

This means sticking to tight monetary policies until inflation consistently drops to the desired level and people's expectations are firmly re-established.

The Bangko Sentral ng Pilipinas (BSP) has flagged the possibility of a 25 basis points (bps) increase in November with inflation having risen in the last two months.

BSP Governor Eli Remolona Jr. has said that monetary authorities were not done with tightening but added that any increase would not be of a magnitude to stifle growth.

"Where tight monetary conditions are straining financial stability, supervisors must monitor systemic risks closely," Srinivasan said.

"And with public debt still high across most of the region, the ongoing gradual fiscal consolidation should continue to build room for maneuver and to ensure debt sustainability," he added.

As long-term outlooks worsen, Srinivasan emphasized the need for countries to intensify their efforts in pursuing reforms that boost growth.

By increasing government revenue and wisely allocating it to areas like education and infrastructure, he said countries could manage public debt and address essential needs.

"Strengthening multilateral and regional cooperation and mitigating the effects of geoeconomic fragmentation are increasingly vital for Asia's economic outlook in coming years," Srinivasan said.

Source: Manila Times