THE National Economic and Development Authority (Neda) now sees gross domestic product (GDP) slightly growing this year because of the recent fierce twin storms, but said the supplemental budget of P12 billion should help the country still achieve the low end of its growth targets of 0.8 percent to 1.8 percent.

At press time, damage to agriculture, a main component of GDP, has reached P24 billion and would weigh down growth.

Agriculture Secretary Arthur Yap earlier estimated that storm damage could pare down agriculture growth rate to a range of 0.5 percent to 1.5 percent from the initial estimate of 1.5 percent to 2.5 percent.

Neda Acting Director General Augusto Santos said, however, that spending a big part of the budget early enough would
enable the country to post positive growth even with the global economic crisis.

On the frontloading of the budget, Santos said, “Yes, it was a wise decision because a recession was prevented. [But] we need the supplemental budget to retain growth targets.”

The Neda had earlier estimated that total damage from storms Ondoy and Pepeng could cut GDP growth down to 0.4 percent to 1.4 percent or a reduction of around 0.4 percentage points from the low end of the target range.

However, the Neda said Filipino workers’ remittances—which the central bank and the World Bank recently admitted having underestimated—would be the balancing factor in overcoming the ill economic effects of the two recent storms on economic growth. While remittances were seen sharply declining owing to the global crisis, they have been coming in at sustained levels. The recent typhoons were even seen to boost the inflows further, as OFWs were to send more funds home to help their families rebuild homes or restore goods damaged by Ondoy and Pepeng.

Santos said that measures such as the proposed cut in remittance fees to 2 percent to 3 percent instead of the current 5 percent would increase what is received by beneficiaries in the Philippines and help boost private consumption.

Finance Secretary Margarito Teves has said worker remittances may grow by around 4 percent this year and 6 percent next year.

However, Santos said that considering the extent of the storm damage, workers may be forced to increase what they send home to their families.