The economy of the Calabrazon region may suffer forgone income of as much as P6.7 billion due to the eruption of Taal Volcano, with the bulk of the impact being felt in the agriculture and services sector, the central bank said on Thursday (Jan. 30).
Despite this, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said that the growth outlook this year for the entire Philippines is “not expected to substantially dampened.”
Diokno said “preliminary indications suggest that the disruption to agriculture, industry and services in the surrounding areas could have minimal impact” on GDP in the first quarter of 2020.
The estimate included losses expected in the agriculture and fisheries sector inside the 17-kilometer radius of Taal Volcano.
Losses in agriculture were expected at P3.1 billion; services, P2.7 billion and industrial sector, P711 million.
Diokno said within the more critical 14-km radius of the volcano south of Metro Manila, the total economic impact was expected at P4.3 billion—P3.1 billion, agriculture and fisheries; P789 million, services and P357 million, industrial sector.
The BSP also saw a slight push upward of inflation in the next couple of months, but the inflationary impact that could be attributed to the eruption was just temporary, especially if the volcano starts to calm down.
The BSP expected higher prices of commodities like coffee, cacao, pineapple, fruits, vegetable, rice, coconut and fish grown or sourced from areas around Taal.
“We can expect a slight uptick in commodity prices in the first quarter of 2020,” Diokno said. The impact, however, “is likely temporary and will dissipate as the situation stabilizes,” he said.
The Philippine Institute of Volcanology and Seismology has recently downgraded the alert level for Taal to 3 from 4.
But Diokno said while the chances of a explosive eruption had grown smaller, “the BSP recognizes that the threat has not fully disappeared.”
At this time, BSP staff was preparing projections in time for the Monetary Board meeting on monetary policy positions next week on Feb. 6.
“Until then, we will continue to monitor the situation for other possible risks to the outlook for inflation and growth,” Diokno said.