Typhoon Haiyan hits Philippines growth in fourth quarter

©AP

The Philippine economy, one of Asia’s fastest growing in the first nine months of 2013, slowed in the last quarter of the year after a destructive typhoon struck the central islands, killing more than 6,000.

In the three months to the end of December 2013, gross domestic product rose 6.5 per cent from a year earlier, a sharp deceleration from a revised 6.9 per cent rise in the third quarter and 7.7 per cent in the first half of the year, according to the government statistics department.

But the figures are better than the government had predicted in the immediate aftermath of the November typhoon, when it warned that fourth-quarter growth could slow to as low as 4.1 per cent. And better than economist estimates ahead of the data release that predicted growth of about 6 per cent.

“This is a remarkable turnround: the economy grew better than our expected target,” said Arsenio Balisacan, the economic planning secretary.

Typhoon Haiyan affected the livelihoods of more than 4m people. Category-5 winds of 300km per hour and storm surges more than 4m high destroyed about 1m houses, roads, schools and power distribution systems in 57 of the 81 provinces. Almost 2,000 people are still missing.

Full-year GDP climbed 7.2 per cent as robust growth in the first nine months of the year offset the recent slowdown. It is the first time since 1988 that GDP grew more than six per cent for a second straight year. Before Typhoon Haiyan, government planners had expected growth in 2013 to reach 7.3 per cent.

The Typhoon’s destructive impact is expected to continue well into 2014, explaining why many economists expect GDP growth to slow further. The World Bank, for example, predicts that economic growth will slow to 6.5 per cent this year before accelerating to 7.1 per cent in 2015.

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The Philippine government, however, is sticking to its GDP growth target of 6.5-7.5 per cent this year, arguing that an ambitious reconstruction programme, funded by a 140bn peso budget, as well as economic recovery in the US, Japan and Europe, the country’s main trading partners, may offset the adverse impact of the typhoon.

President Benigno “Noynoy” Aquino is betting on faster economic growth, which government planners want to bring up to between 7 and 8 per cent by 2016 from an average of 3.9 per cent since 1990, to reduce widespread poverty.

However, the loss of income and assets caused by Typhoon Haiyan could add to the level of poverty, according to government and Asian Development Bank estimates.