Prolonged rains to hurt PH growth in Q3
MANILA - If the country continues to experience prolonged rains brought by typhoons and the monsoon, economists said the Philippine economy would likely take a hit in the third quarter of 2013.
Economists polled by the BusinessMirror said slower growth is possible if the rains would hurt harvests in the agriculture sector and hamper various infrastructure projects nationwide.
“The storm and monsoon will exert downward pressure on production. If prolonged or if they frequently occur, they can make a dent on the strong growth prospects of the economy in the third quarter,” Vice Dean Cid Tarosa of the University of Asia and the Pacific (UA&P) School of Economics said via text message.
Historically, heavy rains and floods usually beset the country during the third quarter of the year, threatening agriculture production.
With this, Philippine Economic Society (PES) President Alvin Ang said the government should continue pouring in more support to the agriculture sector to make the farming community more resilient to disasters.
Part of this assistance, he said, should help them diversify their produce further.
This, Ang added, would steady the country’s growth in the July-to-September period.
Roger Navarro, Philippine Maize Federation Inc., said the corn sector in Quirino province that was severely battered by Typhoon Labuyo is now grappling with floods caused by the monsoon.
Quirino is in Region 2, which is the country’s top corn producer.
Labuyo caused P438 million worth of damage to the agriculture sector in Northern Luzon.
On the positive side, however, economists said that because of the floods, consumption is also boosted during the third quarter.
With many appliances destroyed by the heavy rains, particularly in cities, spending for appliance replacements increases household consumption.
This is captured in the computation of the country’s gross domestic product (GDP) since it is a measure of production. This means that any increase in production as brought by an increase in demand and consumption would positively reflect in the country’s GDP.
Consumption spending is an important part of the Philippine economy. For many years, the economy has been consumption-driven, as spending easily accounts for 70 percent of the economy.
The government targets a full-year growth of 6 percent to 7 percent in 2013. In the first quarter, the economy grew by 7.8 percent, exceeding the targets.
The government hopes the second-quarter performance would be as good as the first three months of the year. The National Statistical Coordination Board will release the second-quarter economic performance on August 29.