(UPDATE) 'Ondoy' to slash RP growth by 0.043%—Neda
abs-cbnNEWS.com | 09/29/2009 6:55 PM
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MANILA - Typhoon 'Ondoy' is likely to shave off at least 0.043% from the Philippines' economic growth target this year, an official of the government's economic planning agency told a Cabinet meeting on Tuesday.
"Using the latest available figures...our preliminary estimate shows that the recent storm could reduce the real GDP growth rate in full year 2009 by at least 0.043 percentage points," acting Socioeconomic Planning Secretary and National Economic and Development Authority (NEDA) Director General Augusto Santos reiterated in a statement.
Thus, the inter-agency Development Budget Coordinating Committee (DBCC) may reduce the growth (GDP) assumption for 2009 to 0.7% to 1.7% from the earlier forecast of 0.8 -1.8%.
Santos said this preliminary estimate on the typhoon's impact to the country's growth was based on currently available reports from the National Disaster Coordinating Council (NDCC), the National Economic and Development Authority (NEDA) Regional Offices, and Office of Civil Defense. Various government agencies have been assessing the impact of damages caused by Typhoon 'Ondoy' (international codename Ketsana)
Previously, economists polled by Business Mirror estimated that the floods which damaged lives, property and industry in Metro Manila, the country's economic and political capital, will shave off the projected third quarter growth by about 0.2%.
First Metro Investment Corp.-University of Asia and the Pacific (UA&P) executive director Victor Abola told Business Mirror that they initially expected growth in the third quarter to be at around 2.3% before hitting a growth of 4.2% in the fourth quarter.
However, due to Typhoon Ondoy, Abola said their GDP growth forecast for the third quarter was reduced to 2.1%.
Impact on agriculture
Former budget secretary Benjamin Diokno noted the impact of the typhoon on key economic factors, including agriculture and manufactured goods.
“I have doubts about any strong rebound from agricultural output and manufactured exports even before the killer typhoon hit the country this weekend," he said.
The weekend typhoon damaged some P3.1 billion worth of paddy rice, or nearly 3% of projected fourth-quarter output, according to Agriculture Undersecretary Jesus Emmanuel Paras on Tuesday.
"Rice was the hardest hit of all the crops," Paras told Reuters, adding that the rice-growing provinces in the main Luzon island suffered the brunt of the impact.
But Paras downplayed the impact of the storm on crops as "very minimal." He said the Philippines has imported 1.775 million tons of the national staple so far this year, compared to an all-time high of 2.3 million tons in 2008.
He added that despite the typhoon's impact on rice, the Philippines, which is the world's biggest rice buyer, has no plans to import more this year.
Impact on infrastructure
Damages to infrastructure, which fuel investments, production, and employment also remain a concern.
"With devastating damages to existing infrastructure, it is doubtful whether the government is capable of massive reconstruction within [or] in less than 90 days,” Diokno added.
Echoing concerns on infrastructure was former Neda director general Cayetano Paderanga. He said “[It is] difficult to say what will happen until we know the extent of the damage. Impact would be on agriculture [and] food prices may go up."
Nonetheless, he noted that "Infrastructure repairs may increase GDP."
Overall, Diokno said the typhoon further reduced the chances of hitting better growth in the second half of the year and, consequently, in the entire 2009.
Remittances
Yet, economic managers have not been quick to downgrade the country's 2009 growth forecast because of one key factor: healthy remittance flows.
Remittances fuel consumer spending--a key factor to the health of the Philippine economy. Consumer spending, after all, drives more than two-thirds of GDP.
Usually, estimates for fourth quarter growth are higher than other periods of the year since consumer consumption is historically high in the months leading to the festive Christmas season.
Santos said the steady inflow of remittances from overseas Filipinos may offset the economic impact of the disaster. Remittances have been stronger than previous estimates.
He suggested that "it is best not to move for now the target of 0.8 to 1.8%for 2009."
Money sent home by Filipinos working and living abroad is now expected to register a modest increase, better than the previous central bank estimate of remittances merely matching last year's record level of $16.4 billion.
Analysts expect remittances to grow 5.5% this year, a reversal of a 0.5% contraction predicted in July, a Reuters poll last week showed.
Remittances grew 3.8% in the first 7 months of the year from the same period in 2008, according to latest data from the central bank.
Bangko Sentral ng Pilipinas governor Amando Tetangco has said he expects remittances to climb more than 3% this year. - with reports from Reuters and Business Mirror
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