The Philippines—which was the second-fastest growing Asian economy in the first three quarters of this year—may still grow by at least 7 percent in 2014 despite the drag caused by the most recent natural disaster.
The damage caused by Supertyphoon “Yolanda,” which hit the country earlier this month, is expected to significantly pull down the pace of economic expansion in the fourth quarter of this year.
Nonetheless, the country’s chief economist said growth in the 7-percent territory remained probable in 2014.
“Yes, that [growth of at least 7 percent] may still happen in 2014 because the country’s economic fundamentals are strong,” said Arsenio Balisacan, director general of the National Economic and Development Authority (Neda).
Balisacan was referring to the relatively healthy fiscal position of the government, and the country’s benign inflation and comfortable foreign exchange reserves that are believed to help sustain the rise in investments.
Confidence in the Philippine economy’s resilience prompted the government’s top economic officials, who met last Thursday, to maintain the official growth target for 2014 at the range of 6.5 to 7.5 percent.
A consensus among government and private-sector economists is that the Philippines, which has one of the highest poverty rates in Asia, needs to grow by at least 7 percent every year for about a decade in order to achieve a significant reduction in its poverty rate.
The government reported the other day that the Philippines grew by 7 percent in third quarter from a year ago.
This marked the fifth straight quarter of economic growth in the 7-percent territory. This also made the Philippines maintain its standing as the second-fastest growing Asian market next to China in the first three quarters of this year.
But based on Neda’s estimate, the Philippines may post a much slower growth in the fourth quarter ranging from 4.1 to 5.9 percent.
The estimate took into consideration the damage to agriculture and infrastructure, as well as disruption of business activities in the hardest hit areas.
But for the full year of 2013, the Neda’s latest projection point to a growth ranging from 6.5 to 7 percent. This is slower than the previous forecast of 7.3 percent, but this indicates that growth in the 7-percent territory remains achievable.