MANILA, Philippines - Economic managers will likely stick to this year’s growth target despite the rising crop damages caused by the dry spell and the power crisis in Mindanao, an official of the National Economic and Development Authority (NEDA) said on Monday.
NEDA director Dennis Arroyo said the impact of the El Niño phenomenon on agriculture and power supply may reduce growth by 0.57 percent but this would be compensated by an improving investment climate and strong remittances from overseas Filipino workers (OFWs).
“Anything is possible but it (revision of growth targets) is unlikely…I am confident we will stick to that (goal),” Arroyo told The STAR at the sidelines of a forum organized by the Joint Foreign Chambers of Commerce.
“There is strong growth in the BPO (business process outsourcing), you have a strong OFW inflow… exports went up by 42 percent (in January),” he added.
Arroyo said the global economic recovery, which is seen to boost external demand, will also benefit the Philippines.
He noted that the agriculture sector only constitutes around 18 percent of the country’s gross domestic product (GDP). Mindanao, he said, also contributes around 18 percent to the total output.
“The impact (on the economy) will be limited,” Arroyo said, adding that the dry spell was anticipated by the government last year.
Latest data from the National Disaster Coordinating Council (NDCC) showed that as of April 6, crop damages due to the El Niño phenomenon has reached P10.41 billion.
NDCC said the dry spell has affected a total of 768,962 hectares of agricultural land and destroyed 733,342.36 metric tons of rice, corn and high-value crops. These damages have affected the livelihood of a total of 245,091 families nationwide.
The El Niño phenomenon has also caused power problems in Mindanao which is heavily dependent on hydropower plants for its electricity. Officials said the dry spell resulted in daily rotating brownouts that last five to eight hours. President Arroyo has placed Mindanao under a state of calamity to allow local governments to tap their respective calamity funds.
The rising crop damages and the brownouts in Mindanao have prompted the Development Budget Coordination Committee technical board to meet last week to review the 2010 growth goal, which currently stands at 2.6 percent - 3.6 percent.
Arroyo expressed optimism that the high-end growth target of 3.6 percent would be attained this year. “The 2.6 percent (low-end target) is there just in case a global disaster (happens). We are trying to be conservative,” the NEDA official said.
Arroyo, however, said the growth target may be raised if the first quarter GDP growth is “unusually high.”
“If it (GDP growth for the first quarter) is unusually high, we will consider upgrading the forecast,” he said without elaborating.
A robust consumption and strong remittances enabled the Philippine economy to escape a recession and grow by 0.9 percent last year. Last year’s growth, however, was the slowest in 11 years as the country struggled to mitigate the impact of the global financial crisis.