The recent typhoons and habagat (monsoon rains) that hit the Philippines will not have much impact to economic growth for the third quarter of the year, according to the newly appointed chief economist of the Department of Finance (DOF).
“It will only have minimal impact,” Finance Undersecretary Gil Beltran said on Friday.
The Philippine economy grew by 7.8 percent in the first quarter, beating market expectations to become Asia’s fastest-growing economy, while the second-quarter growth will be reported next week.
The government is expecting the second-quarter gross domestic product (GDP) growth to be within its 6-percent to 7-percent target for the whole year.
According to the Department of Agriculture, combined damage to agriculture by Typhoon Labuyo and the southwest monsoon— as enhanced by tropical storm Maring—amounted to P2.6 billion, equivalent to 0.09 percent of projected third-quarter gross domestic product (GDP). The agriculture sector accounts for a tenth of economic output.
“Losses from the two major typhoons that hit the country in the third quarter can be recovered,” Beltran said.
In addition, he said that the damage could also have been limited since the Agriculture department launched a replanting program for the affected farms.
This, he said, would allow some farmers to harvest by November, instead of the usual September.
Many of the farms, particularly in Region 3 (Central Luzon) are covered by crop insurance as well, he added.
As for other sectors such as manufacturing, Beltran said that losses are still being estimated “but supposed earnings from two-day work suspension can be recovered in the next few weeks.”
“Manufacturers can schedule additional work time to fill orders,” Beltran pointed out.
As for damage to infrastructure, the official said that “ample fiscal space” will enable the national government—through the Department of Public Works and Highways—to do repairs “without bloating the budget deficit.”
The Aquino administration incurred a deficit of P51.29 billion as of the first semester, much below the P84.656-billion cap for the period, latest DOF figures showed.
“Replanting, rebuilding and reconstruction can make up for the expected losses in GDP,” Beltran said.
“The economy has surplus savings from which to draw to make up for the damage,” he added.
Beltran was appointed by the DOF to head the Office of the Chief Economist (OCE), as full-time economic adviser to the finance secretary, a first in the history of the department since its founding in 1897.
“As such, he will provide senior advice and quality review to analytical and advisory activities,” the agency stated.
Beltran will also be expected to provide economic briefs, speaking notes and representation in conferences, dialogues, meetings and workshops.
He has served the Department of Finance since 1978 and before the appointment, he served as finance undersecretary for the Policy Development and Management Services Group from 2008 to 2013.
DOF said that the OCE was created to provide full-time analytical resource on emerging economic issues and developments to the secretary of finance, in support of ongoing trade and investment policies and activities, including international agreements and business developments.