MANILA - Remittances could grow 5% this year, higher than earlier estimates, as Filipinos overseas send more money home to help their families recover from typhoon wreckage, a senior government official said at the weekend.

Remittances, a driver of consumer spending that fuels more than two-thirds of gross domestic product (GDP), have held up well despite the global economic crisis, growing 3.8% to $9.973 billion in the seven months to July from last year.

"[A] 5% [growth] is possible," Acting National Economic and Development Authority (NEDA) Director-General Augusto B. Santos told reporters. "OFWs [overseas Filipino workers] are scattered worldwide, and OFWs tend to send more during calamities."

Mr. Santos said the expected global economic recovery would also push up remittance inflows.

He said stronger-than-expected remittance growth this year would likely offset the impact of recent typhoons and allow the Philippines to meet its 0.8-1.8% 2009 growth target.

The central bank has officially forecast remittances this year to match the record $16.4 billion recorded last year, even as the surprising 3.8% growth as of July prompted Bangko Sentral Governor Amando M. Tetangco, Jr. to say he expects 2009 remittances to climb more than 3%.

"We are maintaining growth targets because typhoon damages are being offset by OFW remittances and spending on relief, rehabilitation and reconstruction," Mr. Santos said.

But Moody’s Economy.com said recent storms which paralyzed vital parts of the country in the past two weeks may dent growth prospects this year.

And while state-funded reconstruction may generate jobs, long-term benefits to growth would be limited since this would not entail an improvement in economy, but only a restoration of conditions to pre-disaster state.

"[Tropical storm] Ketsana [known locally as Ondoy], which hit the Philippines in late September, and typhoon Parma [Pepeng], which made [its first of three] landfall[s] on October 3, caused deadly floods in areas where the Philippines derives 80% of its GDP," Moody’s Economy.com said in an Oct. 9 paper, entitled: "The Economics of Natural Disasters."

"Because the destruction included heavily populated areas and the capital, Manila, the typhoons will likely dent the Philippine economy in coming months," said the research firm, which is a subsidiary of global debt watcher Moody’s Investor Service.

Metro Manila accounts for about a third of the country’s economy, while other areas affected in Luzon are considered vital food-producing areas, it added.

Some benefit is expected, despite the loss of hundreds of lives and billions of pesos in losses, the firm said, in the form of job creation as the government rebuilds damaged infrastructure.

"After the loss of lives and physical capital, the economy may be boosted by spending on reconstruction and capacity building," Moody’s Economy said.

"However, despite the jobs created and income generated by rebuilding, government investment in physical and human capital may yield little long-run benefit," it stressed. "Rebuilding tends to bring infrastructure and services back only to their pre-disaster conditions."

It added that "lower private consumption in the disaster-struck areas will hurt the wider economy."

NEDA has said the recent storms may slow growth this year to 0.7%-1.7%, versus an official 0.8%-1.8% forecast.