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MANILA – (UPDATED 4:57 p.m.) The country’s stellar economic performance is likely to take a turn for the worse in the short term, according to the National Economic and Development Authority, which on Wednesday said Typhoon “Gener” and the ongoing monsoon rains will not only slow down growth, but also push up prices at a quicker pace.
Earlier, NEDA said Philippine gross domestic product growth in the second quarter likely replicated the 6.4 percent expansion in the first three months of the year that made the country Southeast Asia’s fastest-growing economy and Asia’s second fastest after China.
The agency however is not as bullish about third-quarter economic prospects. Emmanuel Esguerra, NEDA deputy director-general, said inclement weather would “possibly” dampen GDP growth.
"But by how much exactly is speculative until we get a more complete picture," he said. Data from the Department of Agriculture showed that Gener and the southwest monsoon rains cost the farm sector an estimated P152.13 million, with the damage spread across 20 provinces in Luzon and Visayas.
Agriculture accounts for a fifth of the economy. In 2009, Philippine GDP grew by only 0.9 percent partly because of the impact of Typhoons Ondoy and Pepeng. Data from the National Statistical Coordination Board showed that both weather disturbances cost the economy a combined P38 billion.
Besides slower growth, bad weather and the floods it spawned would cause a temporary surge in prices, NEDA officials said.
"The impact of the floods on supply chains, particularly on foods prices is still being assessed. Although I expect that the overall inflation for the year will still be within target range," Socioeconomic Planning Secretary and NEDA Director-General Arsenio Balisacan told Interaksyon.com in a text message.
The government targets an inflation rate of 3-5 percent this year.
“Surely, the bad weather, in causing the production and transport of important commodities especially food, will have an effect on prices. By how much exactly we cannot tell right now as we are still trying to obtain from the field estimates of the extent of lost output due to the destruction, which appears to be rather extensive," Esguerra said.
Earlier, the Department of Trade and Industry said fish and vegetable prices have increased by P10 to P40 and P10 to P20, respectively, as supplies ran low due to incessant raining.
"I expect a short-term rise in foods prices, but should not be cause for concern," Benjamin Diokno, economics professor at the University of the Philippines told Interaksyon.com in a text message.
He said inflation is still tame, with the “year to date average towards lower bound of government official forecast.”
The NSO on Wednesday reported that inflation rose to 3.2 percent in July from 2.8 percent in June. Last month's inflation was near high end of the Bangko Sentral ng Pilipinas' forecast of between 2.6-3.5 percent and the highest since January’s 4 percent.
The July figure brought the year-to-date inflation to 3.1 percent, still within the BSP full-year target of 3-5 percent.
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