RP may still hit growth target on reconstruction spending

MANILA, Philippines - The Philippine economy may still grow within the government’s 0.8 to 1.8 percent growth target this year because of private and public spending on reconstruction efforts, Socioeconomic Planning Secretary Augusto Santos said yesterday.

Santos said despite the damage brought about by typhoons Ondoy and Pepeng on agriculture and infrastructure, gross domestic product (GDP) may still hit the lower end of the full-year target.

He noted that massive reconstruction efforts and strong remittance inflows will keep the economy growing this year.

“GDP may increase this year due to spending of public and private on reconstruction,” he said.

Santos also said there was no need to change the growth targets despite damages to the agriculture sector. “We will maintain our present growth rate,” he said.

However, Santos said third quarter growth may be slower than the 1.5 percent recorded in the second quarter because of the damage caused by the two typhoons.

In the first quarter of the year, the economy grew by a revised 0.6 percent.

Santos said that while the government continues to count the damage of the typhoon on the agricultural sector and infrastructure, dollar remittances from overseas Filipinos have been steadily pouring in.

Remittances in August reached $1.4 billion, 2.8 percent higher than last year’s inflow, latest data from the Bangko Sentral ng Pilipinas (BSP) showed.

The latest figures brought to $11.3 billion the total remittances for the first eight months, a 3.7 percent increase from last year’s level.

The BSP has said that remittances may grow by more than three percent this year. The latest estimate is higher than the two to three percent projected growth for 2009 and the original zero growth projection. In 2008, remittances hit $16.4 billion.

Finance Secretary Margarito Teves however, said earlier that the impact of the typhoons may slow economic growth to 0.6 percent to 1.6 percent this year.

The damage caused by typhoons Ondoy and Pepeng is now estimated at P30 billion. According to government estimates, a damage of P7 billion is enough to bring about a 0.1 percent change in GDP.

More than P18 billion worth of agricultural crops and fishery products were destroyed by the recent typhoons.

National Statistical Coordination Board secretary general Romulo Virola also confirmed that typhoons have negative impact of economic growth.

The NSCB explained that while it was reported that tropical storm Ondoy and Pepeng left over P18 billion in damages to agriculture and fisheries, “the reduction in gross value added of agriculture and fishery will not be equal to P18 billion.” – With Mary Ann Reyes