NEDA sees minimal impact by El Niño on RP growth

MANILA, Philippines – The National Economic and Development Authority (NEDA) expects the impact of the long dry spell caused by El Niño to be minimal, taking away just 0.57 percentage points from the growth rate as measured by gross domestic product (GDP).

NEDA director Dennis Arroyo, in a briefing held after yesterday’s Cabinet meeting at Malacañang, pointed out that the impact of El Niño on the economy is limited considering that the most affected sector, agriculture, makes up only 18 percent of GDP.

There is also an impact on the power sector because of the dwindling water supply in the hydroelectric plants but Arroyo noted that this is generally limited to Mindanao.

Mindanao also represents just 18 percent of GDP in comparison to Luzon, which includes Metro Manila, at 66 percent.

It was revealed that the total agricultural land affected is now at 753,606.61 hectares with an equivalent total production loss of 685,485.36 metric tons or P9,577,980,786.

The government has provided support to the farmers affected by the long dry spell, including emergency employment to help make up for the lost income.

The industry and services sectors, which account for 32 and 50 percent of GDP respectively, continue to experience strong growth with the rebound of the world economy from the global financial crisis.

Consumption remains high and will continue to boost growth.

Arroyo noted that consumer confidence continued to improve despite the slight dip in the last quarter based on the latest survey of the Bangko Sentral ng Pilipinas.

From -36 percent in the fourth quarter of 2009, consumer confidence has rebounded to -27.6 percent or an 8.4-percent improvement.

Consumer sentiment for the next 12 months also sustained its upward trend, breaching the positive level, settling at 5.1 percent after hovering in negative territory since the second quarter of 2008.

Arroyo also noted that the latest consumer expectations survey of the BSP revealed that consumers consider this quarter’s buying conditions as more favorable than the last quarter, with a more optimistic outlook on purchases of consumer durables.

According to Arroyo, the government’s economic planners continue to expect this year’s growth to be at the higher end of the 2.6-to 3.6-percent range. –Marvin Sy (The Philippine Star)