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Gov’t to slash growth goal due to dry spell

By Aytch de la Cruz

02/23/2010

The government is considering lowering the growth target this year citing the effects of the El Niño weather disturbance on the agriculture and power sectors, acting Socioeconomic Planning Secretary Augusto Santos said yesterday.

Santos said the government is likely to lower the high-end range of the gross domestic product (GDP) expansion of 3.6 percent this year.

The GDP grew by only 0.9 percent last year or at the lower end of the official target range of 0.8 percent to 1.8 percent. It was the weakest growth figure since 1998.

He said the El Niño affects not only the agriculture but also the energy sector.

“If agriculture will suffer and the energy sector will suffer then most likely we will have to revise that range downwards ... maybe not below 2.6 percent or we may have to reduce the high-end target,” he said.

Santos said Neda gets reports of frequent brownouts, particularly in Visayas and Mindanao.

“There’s a close relation between energy and the economy,” he said.

The government said the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa) projected that the El Niño may linger for three months or more.

The Department of Agriculture had projected that a “mild” El Niño could cost the farm sector at least P15 billion in losses.

Losses from a tame El Niño, meanwhile, according to the Agriculture department, could mean losses of up to P9 billion.

In 1998, Philippine GDP contracted by 0.6 percent because of an El Niño episode and the Asian financial crisis.

Back then, the El Niño damaged 2.5 million metric tons of crops over an area of more than a million hectares for an aggregate amount of P8.3 billion.

Presidential spokesman on economic affairs Gary Olivar said the destructive effects of El Niño on the economy will however be offset by the strengthening global recovery which would benefit local exports and the manufacturing sector.

This would strengthen the markets for Filipino overseas workers, as well, Olivar said.

As recovery continues to spread, economic activity will go up, the tax base will widen and deepen that would be good news for deficit management, he said.

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