Philippines: Selected Issues

This Selected Issues paper focuses on unpacking macroeconomic impacts of climate events and policy implications in the Philippines. A shock from a single category 5 typhoon has modest impacts on the overall economy but becomes critical on a macro level in the downside scenario. Sectoral output and price responses vary according to the degree of pricing frictions and their positions within production networks. The Philippines’ high exposure to natural disasters makes climate change a structural macroeconomic risk, underscoring the need for a whole-of-government response. The study contributes to the policy discussion by providing new evidence on the macroeconomic impacts of typhoon shocks in the Philippines, with important implications for both monetary and fiscal policies. Climate change poses macro-critical risks for the Philippines. Monetary authorities navigate complex policy trade-offs when responding to severe typhoon shocks. Fiscal policy is central to building climate resilience, with investment in climate-resilient infrastructure playing a key role in mitigating the macro impacts of natural disasters.