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Bangko Sentral says Yolanda impact on economy ‘contained’

Typhoon Haiyan survivors run towards a Philippine Air Forces helicopter as it drops food supplies in Barangay San Antonio, Basey Samar November 25, 2013. Haiyan, the biggest storm ever to make landfall, struck the central Visayan islands on November 8, killing more than 5,200 people, displacing 4.4 million and destroying about 12 billion pesos in crops, property and infrastructure. (MNS photo)

Typhoon Haiyan survivors run towards a Philippine Air Forces helicopter as it drops food supplies in Barangay San Antonio, Basey Samar November 25, 2013. Haiyan, the biggest storm ever to make landfall, struck the central Visayan islands on November 8, killing more than 5,200 people, displacing 4.4 million and destroying about 12 billion pesos in crops, property and infrastructure. (MNS photo)

MANILA  (Mabuhay) – The actual impact of killer Typhoon Yolanda on the real economy is actually limited, and higher remittances  from overseas Filipinos to their relatives in Central Philippines will buoy consumption spending.

Higher remittances “could provide additional counterweight and support to the real” gross domestic product (GDP), Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo told reporters in a chance interview over the weekend.

Guinigundo said remittances in November and December will post “stronger growth than in the previous months of 2013 to cover for the extra cost of rehabilitation” in Yolanda-hit areas in the Visayas.

Latest remittance data as of September showed cash transfers grew 5.3 percent year-on-year, sustained by deployment of more workers abroad and expansion of cash transfer services.

Earlier this month, analysts pointed out remittances grow  3.7 percentage points over and above the usual rates in times of disaster.

The projected increase “shields the economy from slow down since remittances provide for consumption spending,” which is one of the two key factors to Philippine growth other than services, said John Paolo Rivera, economist at De La Salle University (DLSU) in Manila.

The DLSU economist sees GDP growing 5 percent to 6 percent in the fourth quarter, or within the upper band of the 4.1 percent to 5.9 percent expansion revealed  by Socioeconomic Planning Secretary Arsenio Balisacan a week after typhoon Yolanda battered central Philippines on Nov. 8.

“Remittance inflow in the Philippines is counter-cyclical – during times of crisis, the amount of remittance still increases because migrant workers must send financial support for the survival of their dependents,”  Rivera noted.

The Philippine economy grew by 7.6 percent in the first half, the fastest in Southeast Asia.

‘Impact on GDP contained’

The areas devastated by Yolanda account for 12 percent to 13 percent of the economy, “so the impact on total GDP is contained,” Guinigundo said

Noting that the whole region does not have zero economic activity, he said any “slack in domestic demand in the affected areas may be matched by a corresponding increase in the other areas which were less affected by the super typhoon.”

The affected regions were mostly agricultural, said Rivera, adding that the sector has been a negative contributor to growth in the past quarters.

“The economic impact will not be that very significant. But the impact on human life and properties was really, really significant and we share the pain of our countrymen for that,” said Guinigundo.

The view was shared by Barclays economists Prakriti Sofat and Bill Diviney. “We think the growth impact is manageable…” they said in the Global Economics Weekly report.

However, Sofat and Diviney said bulk of the typhoon’s impact “will occur in the fourth quarter,” before any reconstruction lifts GDP in the first half of 2014.

While Barclays lowered its full-year 2013 forecast to 6.8 percent from 7.2 percent earlier, its new forecast remains within the 6 percent to 7 percent targeted by the government for the year.

Noting that the whole region does not have zero economic activity, he said any “slack in domestic demand in the affected areas may be matched by a corresponding increase in the other areas which were less affected by the super typhoon.”

The affected regions were mostly agricultural, said Rivera, adding that the sector has been a negative contributor to growth in the past quarters.

“The economic impact will not be that very significant. But the impact on human life and properties was really, really significant and we share the pain of our countrymen for that,” said Guinigundo.

Super typhoon Yolanda destroyed coastal towns and cities in central Philippines. The death toll has reached over 5,000. (MNS)

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