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ING: Recovery to start by Q1 of 2014

The Philippine economy’s recovery from the negative supply shocks brought about by Supertyphoon Yolanda (international code name Haiyan) can be seen as soon as the first three months of next year, as producers are seen to restore production at the soonest, a Singapore-based economist said.

ING Bank Chief Economist for Asia Tim Condon said economies, such as the Philippines, recover quickly from the reeling effects of typhoons as producers have a “strong incentive” to re-establish their production line to avoid losing their customers.

Condon said growth will likely pick up in the first quarter of the next year. He said that whatever the Philippine economy lost in terms of growth in the last quarter of 2013 will be regained in the months of January to March in 2014, contrary to the views of several economists who said the shocks brought about by the typhoon will drag the economy down until the first quarter of the year.

“For this reason, the forecast for the first- quarter growth [of the Philippines] should be increased by the amount of any typhoon-related cut to the fourth quarter of 2013 forecast,” Condon said.

Economic managers in the country earlier expressed that the economy will likely slow down significantly in the months of October to December this year due mainly to the damages brought about by the super typhoon that hit the Visayas in early November.

Early estimates of the government showed that the economy of the Philippines could slump to as low as 5 percent in the last quarter of the year from the 7-percent growth in the third quarter of this year.

If growth should hit 5 percent in the last quarter of the year, the full-year Philippine growth will still be at 6.8 percent, within the government’s official target range of 6 percent to 7 percent in 2013.

Condon, likewise, expressed that they are looking to revise their full-year forecast downward from the earlier forecast of 7.2 percent. He did not express as to how large the magnitude of the downgrade in forecast would be.

He also backed the view of the Bangko Sentral ng Pilipinas (BSP) several economists that the typhoon will likely cause inflation to spike in November.

“However, like any to hit growth, an inflation spike would be transitory,” he said.

Condon also said the BSP will likely maintain all its policy rates on record lows until the first half of next year as the central bank chief Amando M. Tetangco Jr. said earlier that the monetary settings are still appropriate amid the looming risks locally and globally.

Bianca Cuaresma

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