Strong consumer spending to lift economy in Q4 - NEDA

MANILA, Philippines - The National Economic and Development Authority expects strong consumer spending to boost economic growth in the fourth quarter of this year and help the government attain its growth target for the year.

NEDA deputy director general Rolando Tungpalan noted that spending during the fourth quarter is historically higher as overseas Filipino remittances start to come in at its highest levels during this period.

Despite the damage caused by typhoons Ondoy and Pepeng to the agriculture sector in September and October, Tungpalan expects the economy to end up within the 0.8 to 1.8 growth target set by the government’s economic planners.

The Department of Agriculture estimates the damage caused by Ondoy and Pepeng to infrastructure and fisheries at over P24 billion.

Agriculture represents one of the biggest growth sectors of the economy so any significant development in the sector would have an adverse effect on overall growth.

The actual damage caused by the storms on the agriculture sector would be known by the end of the month when the Post-Disaster Needs Assessment effort led by the World Bank is expected to be concluded.

Tungpalan said that the same reason for the expected decline in the agriculture sector would help pull up the economy in the fourth quarter.

Typhoon Ondoy brought about billions in damage to infrastructure and property, particularly in Metro Manila where several thousands of homes were submerged in floodwaters.

Tungpalan explained that consumer spending on durable goods is expected to grow at high levels as the residents affected by the floods start to replace their belongings that were destroyed.

Spending on some services would also post high growth such as vehicle repairs because of the large number of cars that went under water.

“The bottom line here is that this (agriculture damage) will be offset easily by the spending on durables. We believe that consumer spending would be very strong,” Tungpalan said.

The government would also be a major contributor to spending with its relief and rehabilitation works after the storms.