NEDA trims growth forecast due to ‘Ondoy, ‘ ‘Pepeng’

THE National Economic and Development Authority (NEDA) said the two recent typhoons that hit the country could further dampen economic growth this year. Dennis Arroyo, NEDA-National Planning and Policy Staff director, told reporters that Philippine gross domestic product (GDP) growth may be cut by 0.2 percentage points to between 0.6 percent and 1.6 percent this year. The official target is between 0.8 percent and 1.8 percent.

Philippine GDP in the first half grew by 1 percent, lower than the 4-percent expansion in the same period last year.

An indicator of economic performance, GDP is the value of all final goods and services produced in the country.

Arroyo said official estimates of the damage to infrastructure and agriculture caused by Typhoons Ondoy and Pepeng run to about P9.76 billion.

The Department of Agriculture reduced its farm output growth target to between 1 percent and 2 percent this year form an earlier estimate of 3 percent to 4 percent, after the two typhoons caused more than P6 billion in damages to the sector.

Despite this, the government is maintaining its growth target this year because of the robust remittances from overseas Filipino workers (OFWs), Arroyo said.

“GDP is not an indicator of welfare and suffering, but it’s an indication of production,” he added.

The NEDA official said remittances from OFWs will “offset” the impact of the typhoons.

Data from the Bangko Sentral ng Pilipinas showed that money sent home by Filipinos abroad rose 3.8 percent to $10 billion in the first seven months this year.

Arroyo also said that relief operations for typhoon-hit families would prop up the retail and wholesale industry.

Benjamin Diokno, Budget secretary during the Estrada administration said it is too early to determine the economic impact of Ondoy and Pepeng.

“NEDA’s new forecast that 2009 GDP growth would be from 0.6 percent [to] 1.6 percent appears reasonable. But the impact of the twin typhoons is long and deep because of the wealth effect,” he said.

“Homeowners in flooded [areas] are poorer now because of depressed property values, on average about 15 percent. In the meantime, public sector finances continue to deteriorate. Thus, it would be a mistake to ignore the long-term consequences of Ondoy and Pepeng,” the University of the Philippines economics professor said.

He said the worst impact is on consumer confidence, adding that some private firms are thinking of advancing their Christmas bonuses to keep their workers’ spirits up. “That tides over some victims of the weekend tragedy, though it may mean blue Christmas for them and others.”

He said this confluence of events suggests that it is increasingly more difficult for the Philippine economy to meet even the low end of its revised economic growth target. –Darwin G. Amojelar, Senior Reporter, Manila Times