Yolanda impact manageable – global banks

MANILA, Philippines - The country’s economic growth prospects remain on solid ground despite the massive devastation caused by the recent supertyphoon, top global investment banks said in separate reports.

UK-based Barclays said it expects Super Typhoon Yolanda (international name Haiyan) to take its toll on Philippine economic growth in the last quarter of 2013 but pointed out that the impact on the economy as a whole is manageable.

“We expect the recent typhoon to have negative impact on the Philippines’ growth in fourth quarter,” it said in its latest Emerging Market Weekly Report.

“Although Typhoon Haiyan will likely affect growth and inflation in the near term, we think the growth impact is manageable and that the central bank will look through a supply-side related rise in inflation given well-anchored expectations,” it added.

“We believe the bulk of the typhoon’s impact will occur in the fourth quarter and have lowered our 2013 gross domestic product (GDP) forecast by 40  basis points, to 6.8 percent from 7.2 percent. Growth averaged 7.6 percent in the first half of the year,” Barclays said.

On the other hand, Barclays said it has maintained its growth outlook for next year.

“We maintain our 2014 growth forecast of 6.5 percent, but we will monitor developments and adjust our forecast accordingly over the coming months,” it said.

For its part, US financial giant JPMorgan Chase Bank NA has scaled down its Philippine economic outlook to 6.9 percent from an earlier 7.1 percent forecast this year, but strengthened its 2014 projection from 5.6 percent to six percent.

JPMorgan economist Matt L. Hildebrant said due to the destruction brought about by Yolanda, the Philippine economy would be following a “V”-shaped economic dip and recovery trajectory.

He said that the higher GDP growth outlook for 2014 was due to the anticipated boost from recovery and rebuilding.

It said Eastern Visayas, which was worst hit by the typhoon, accounts for only 2.2 percent of GDP.

“As in most natural disasters, we expect the hit to growth to be temporary,” the JPMorgan economist said.

It is expected that once electricity is restored and major infrastructure like roads is restored, rebuilding should lead to a rebound in growth, he noted.

“We have revised our fourth quarter GDP forecast down to two percent (annualized) from 5.7 percent, but we have revised up our first quarter and second quarter forecasts to 8.5 percent and 7.6 percent, from 5.7 percent,” Hildebrant added.

Likewise, Australia and New Zealand Banking Group Ltd. (ANZ) said it has revised its economic growth outlook for the Philippines to 6.8 percent for 2013, from its earlier forecast of 7.1 percent.

But it added that the Philippine economy is expected to weather the storm and expand anew to 6.9 percent next year.

“We upwardly revise our 2014 gross domestic product (GDP) growth forecast to 6.9 percent from 6.5 percent on the back of reconstruction efforts of both the public and private sectors. Strong liquidity in the system is adequate to support rehabilitation,” Eugenia Fabon Victorino, ANZ economist for Asia Pacific, said.