Increased spending insufficient to offset storms' impact, report says
11/09/2009 | 02:17 PM
Expected higher spending due to the upcoming elections and reconstruction efforts may not be enough to offset the negative impact of recent storms on the economy, the "Market Call" report released on Friday by the University of Asia and the Pacific (UA&P) and First Metro Investment Corp. (FMIC) read.
UA&P and FMIC said they downscaled their growth forecast for this year to 2.1 percent from an earlier 2.2 percent projection in order to take into account losses caused by storm "Ondoy" and typhoon "Pepeng."
This, even as they believe that the looming election campaign as well as rehabilitation efforts will allow spending to pick up in the last quarter.
"The unprecedented damage caused by the back-to-back typhoons has upset the growth momentum, and made the art of forecasting even more difficult. While we see a slight cut in our growth estimates, the spending momentum is likely to be regained with reconstruction and election spending starting the fourth quarter," the report read.
"We have scaled down nonetheless, our full-year GDP (gross domestic product) growth forecast to 2.1 percent, as the positive spending may not be sufficient to completely offset the output losses in agriculture and productive capacity."
UA&P and FMIC previously predicted 2.2 percent economic growth for this year. The latest forecast, however, is still more optimistic than the government’s own 0.8 percent-1.8 percent outlook for 2009.
Tropical storm "Ondoy" devastated parts of Metro Manila and nearby provinces last Sept. 26, while typhoon "Pepeng" hit the agricultural north on Oct. 3. They caused around P40 billion worth of damage and took the lives of nearly a thousand people.
The National Economic and Development Authority, however, has said there is no need to revise the government’s growth forecast since the effects of storm damage can be offset by growth drivers like rising remittances from overseas Filipino workers.
In the same report, UA&P and FMIC said the budget deficit this year may breach P300 billion as the government will likely allot resources to rebuild areas worst hit by the storms.
"With the destructive floods early this month and reconstruction work to be done on infrastructure, the national government deficit is now likely to reach P300 B[illion] or 3.8 percent of GDP," the report read.
Last week, Finance Secretary Margarito B. Teves admitted that the P250-billion deficit ceiling may be surpassed, since asset sales may not be enough to make up for lower revenues resulting from the economic slump, revenue-eroding laws and, lately, damage from recent storms. - Alexis Douglas B. Romero, BusinessWorld
UA&P and FMIC said they downscaled their growth forecast for this year to 2.1 percent from an earlier 2.2 percent projection in order to take into account losses caused by storm "Ondoy" and typhoon "Pepeng."
This, even as they believe that the looming election campaign as well as rehabilitation efforts will allow spending to pick up in the last quarter.
"The unprecedented damage caused by the back-to-back typhoons has upset the growth momentum, and made the art of forecasting even more difficult. While we see a slight cut in our growth estimates, the spending momentum is likely to be regained with reconstruction and election spending starting the fourth quarter," the report read.
"We have scaled down nonetheless, our full-year GDP (gross domestic product) growth forecast to 2.1 percent, as the positive spending may not be sufficient to completely offset the output losses in agriculture and productive capacity."
UA&P and FMIC previously predicted 2.2 percent economic growth for this year. The latest forecast, however, is still more optimistic than the government’s own 0.8 percent-1.8 percent outlook for 2009.
Tropical storm "Ondoy" devastated parts of Metro Manila and nearby provinces last Sept. 26, while typhoon "Pepeng" hit the agricultural north on Oct. 3. They caused around P40 billion worth of damage and took the lives of nearly a thousand people.
The National Economic and Development Authority, however, has said there is no need to revise the government’s growth forecast since the effects of storm damage can be offset by growth drivers like rising remittances from overseas Filipino workers.
In the same report, UA&P and FMIC said the budget deficit this year may breach P300 billion as the government will likely allot resources to rebuild areas worst hit by the storms.
"With the destructive floods early this month and reconstruction work to be done on infrastructure, the national government deficit is now likely to reach P300 B[illion] or 3.8 percent of GDP," the report read.
Last week, Finance Secretary Margarito B. Teves admitted that the P250-billion deficit ceiling may be surpassed, since asset sales may not be enough to make up for lower revenues resulting from the economic slump, revenue-eroding laws and, lately, damage from recent storms. - Alexis Douglas B. Romero, BusinessWorld
