Economic managers yesterday said the devastating effects of tropical storm Ondoy and typhoon Pepeng on the farm and infrastructure sectors could take its toll on economic growth, but prospects remain bright due to strong remittances from abroad.

National Economic and Development Authority (NEDA) acting director general Augusto B. Santos said while the damage caused by the two storms could affect growth prospects, the government is keeping its gross domestic product (GDP) targets of 0.8% to 1.8% for the year.

"Using NEDA estimates, the impact of Ondoy on GDP growth is -0.22 and -0.11 [percentage points] for Pepeng but we’re counting on remittances which could grow by 4% to 5%," he said at yesterday’s Cabinet meeting.

Remittances grew by 3.8% as of July from the same period last year. Official Bangko Sentral ng Pilipinas forecast said remittances in 2009 could match the record $16.4 billion inflows last year.

Data from the National Disaster Coordinating Council (NDCC) showed damage caused by Ondoy and Pepeng on infrastructure and agriculture has so far reached P15.5 billion.

The government’s bullish sentiment is shared by Metropolitan Bank and Trust Co. (Metrobank) which expects the country’s GDP to likely grow by 1.5% this year.

In its year-end Economic Weather Report published on Oct. 11, the country’s second largest bank expects economic growth to settle within government targets this year with the help of higher consumer spending as households repair the damage done on their homes by recent natural calamities.

Calamity-related government expenditures and a gradual recovery in exports are also expected to drive growth this year, helping the Philippine economy successfully skirt a recession.

Metrobank said Philippine gross domestic product (GDP) would likely grow by 1.5% this year.

"Rehabilitation efforts following the onslaught of tropical storm Ondoy and typhoon Pepeng are expected to fuel government spending. Personal consumption is also seen to pick up as typhoon victims start to rebuild their homes," the bank said.

"The increase in housing repairs and other infrastructure repairs could contribute to GDP growth in the fourth quarter," the bank added.

However, as a result, the bank said the government’s budget target for the year would likely be breached as spending is hiked to repair damaged roads and other infrastructure.

"The P250-billion deficit ceiling will likely be exceeded amid the need for increased spending for rehabilitation efforts following the onslaught of the typhoons," the bank said in its report.