Philippine farm output grew 3.64 percent in the second quarter from a year earlier but the sector is hurting from a dry spell and full year growth is unlikely to hit the 4.5 to 5 percent target, the government said on Monday.
Still, slower-than-expected farm output this year should not be a drag on the overall economy as a strong services sector and higher government spending may offset the impact of weaker harvests, analysts said. "We will be hard pressed to meet the full year target," Agriculture Secretary Arthur Yap told reporters regarding farm output growth this year.
Rice and corn plantations on the main island Luzon were damaged by a dry spell that lasted well into the rainy season but harvests from the central Visayas and southern Mindanao islands could make up for the shortfall in grain output, Yap said.
Farm output, which accounts for nearly a fifth of the local economy, expanded a revised 3.3 percent in the first quarter after 1.5 percent growth in the fourth quarter of 2006 when a slew of typhoons damaged harvests and infrastructure.
"The prospects of the sector I think will still very much hinge on the vagaries of the weather," said Vishnu Varathan, economist at Forecast Pte. "The extended drought could weigh on performance in the second half of the year."
But higher government spending to rehabilitate and upgrade schools, hospitals, roads and bridges as well as sustained growth in the services sector is expected to support economic growth this year. The government expects growth in gross domestic product to reach 6.1 to 6.7 percent this year from 5.5 percent in 2006. The government is scheduled to announce first half economic growth data on August 30.
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