The impact of the Super Typhoon Yolanda will take its toll on the growth of the Philippine economy, a group of international accountants said.
In its latest “Economic Insight: South East Asia” report, the Institute of Chartered Accountants in England and Wales (ICAEW) said that, “strong government spending in the Philippines and an expected increase in exports to China in the latter half of this year were forecast to boost GDP [gross domestic product]growth to 6.9 percent in 2013.”
However, it noted that the tragic devastation caused by Yolanda, and the resulting economic and social damage will prevent this level of growth.
The think tank also expects that the economic growth in the latter part of the year will be weaker compared to the past quarters.
The Philippine economy slowed down on the third quarter of the year as the GDP fell to 7 percent compared to the revised 7.6-percent growth in the second quarter. Despite this, the government is optimistic that the economy will expand within the 6-percent to 7-percent growth target this year.
“While it is too early to reliably quantify the economic implications of this natural disaster, we expect economic growth to be noticeably weaker in the final quarter of this year,” it stated.
By 2014, the ICAEW said that the Philippines may grow by 5.8 percent or lower than the 6.5-percent to 7.5-percent growth target of the government.
The group said that slowing growth in government spending and tighter monetary policy in the US are expected to limit the country’s growth in 2014, but noted that rebuilding activity in the wake of the recent typhoon could help support growth.
Meanwhile, for 2015, the group said that Philippine GDP growth may fall further to 4.8 percent.
“Obstinately high unemployment rates and high poverty levels, combined with the need to raise interest rates to attract capital, will cause GDP growth to fall to 4.8 percent in 2015,” it stated.
“These forecasts will change as more information about the economic impact of the typhoon and the subsequent rebuilding effort becomes available,” it added.
The ICAEW report “Economic Insight: South East Asia” is produced by Center for Economics and Business Research Ltd., ICAEW’s partner and economic forecaster.
Commissioned by ICAEW, the report provides its 140,000 members with a current snapshot of the region’s economic performance. The report undertakes a quarterly review of Southeast Asian economies, with a focus on the five largest countries; Indonesia, Malaysia, the Philippines, Singapore and Thailand.