Think tank sees less consumer demand

The immediate negative impact of tropical storm Ondoy on consumer and business confidence was hard to ignore, with all affected regions—including Metro Manila—accounting for more than 50 percent of the Philippine gross domestic product (GDP) and with recovery from the global crisis still quite weak, a New York-based think tank said in its latest market research.

The country posted a 1.5-percent growth in GDP in the second quarter of the year.

An indicator of economic performance, GDP is the amount of goods and services produced in a country in a year.

Global Source said that given the damage to life and property, negative wealth effects could be expected to reduce consumer demand even as the country entered the Christmas season.

As of the latest official count, the flooding has affected more than 2.5 million people with at least 270 dead, 680,000 dislocated and 4,600 houses wrecked or damaged. Loss in infrastructure and agricultural output has been estimated to reach $100 million.

Moreover, there have been disruptions on factory, trading and banking operations as well as power, telephone and water delivery, among others.

On Saturday, power distributor Manila Electric Co. (Meralco) cut off electric service to some flooded areas in Metro Manila to prevent accidents.

The Philippine Chamber of Commerce and Industry (PCCI) earlier said that businesses in Metro Manila alone lost about P1 billion to the floods brought by Ondoy.

PCCI members accounted for P600 million while the rest was incurred by unaffiliated firms.

The federation had also reported that steel and glass processors along the Pasig River were flooded.

Other factories such as Unilever Philippines and Alaska Milk Corp. were also reported to have shelved production to make way for cleanup operations.

Other firms, meanwhile, had said that business slowed as employees could not come to work.

As Metro Manila focused on relief efforts, it had contributed to lackluster trading in local financial markets in the past days.

Dealers earlier said that the stock market would likely move within a tight band in the coming weeks as they consolidated in the face of massive storm damage.

The composite index fell 1.31 points, or 0.05 percent over the week to close at 2,820.03.

“Nevertheless, we think that there will be other fund sources to help sustain spending,” Global Source said referring to remittances, borrowings and savings, among others.

Remittances from overseas Filipino workers would pitch in with additional contributions to family members affected by the floods, while borrowings for consumer and home loans as well as business restocking and plant repairs suggested some short-term private investment activity, even though bankers are anticipating an uptick in delinquency, the think tank noted.

It also sees a spike in demand for building supplies and replacement of appliances in the short-term, although spending on non-essential items are cut back, Global Source stressed.

“More information is expected to come in the next few days, including any add-on effects of another super typhoon [stronger winds, less downpour] that has just entered the country,” it said, referring to Typhoon Pepeng, which brought damage to the northern part of the country.

Large parts of northern Philippines were flooded and without power Sunday after Pepeng (international codename: Parma) killed at least 12 people, as authorities warned of another storm looming to the east.

Exactly one week after tropical storm Ondoy (international codename: Ketsana) dumped the heaviest
rains in more than 40 years that devastated Metro Manila and outlying provinces, killing nearly 300 people, Pepeng ripped through the north of the Philippines’ main Luzon island on Saturday.

Ondoy and Pepeng combined damaged more than P6 billion in infrastructure and agricultural products, causing the Department of Agriculture (DA) to pull down its growth target for 2009.

Agriculture Secretary Arthur Yap also on Monday said that their 3-percent to 4-percent growth target for this year may be reduced to 1 percent to 2 percent.

To date, estimated combined damage to agriculture sector of tropical storm Ondoy and Typhoon Pepeng has reached P6.8 billion.

Based on the latest report of the DA Central Action Center, Pepeng has damaged around P403,184,806 worth of rice crops, P435,182 for corn and P49,220,871 worth of high value commercial crops.

Ondoy damaged an estimated P5,076,495,113 worth of rice crops, P64,566,659 of corn and P140,595,140 of high value commercial crops.

The fisheries sector lost P210,827,365 and livestock and poultry, P41,068,240.

Ondoy also damaged around P821,116, 436 worth of infrastructure such as irrigation.

Meanwhile, donations for victims of Ondoy continued to come in at the National Food Authority (NFA) warehouse along Visayas Avenue, Quezon City, one of the agency’s designated receiving centers for relief goods.

On October 1, the Bureau of Fisheries donated 40 bags of assorted food items while the PSMA-Atlas Cane Commodity in Quezon City gave 100 bags of refined sugar.

Other NFA warehouses designated as Relief Receiving Centers are NFA Kingswood Warehouse at No. 222 Quirino Avenue, Baesa, Quezon City; and NFA-FTI Warehouse at the FTI Complex along DBP Avenue, Taguig City. –Ira Karen Apanay, Manila Times