Posted on 30 Sep 2009
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Central bank governor Amando Tetangco said there could be some uptick in prices of construction materials, furniture and appliances as flood victims rebuild their homes, but vigilant monitoring by the government should keep prices generally stable.
“Our inflation target for 2009 is not likely to be breached,” Tetangco said in a mobile phone text message to reporters. “Our current baseline forecast of 3 per cent allows us some headroom as this is within the lower bound of the 2.5-4.5 per cent target.”
Damage from the floods could slash the current 2009 growth estimate by a minimal 0.1 percentage point, but strong inflows of remittances from overseas Filipinos may offset the economic impact of the disaster, said Dennis Arroyo, head of policy planning at the economic planning agency.
“All other things being equal, it (damages from Typhoon Ketsana) may reduce GDP (growth) to 0.7 to 1.7 per cent versus our baseline forecast of 0.8-1.8 per cent,” Arroyo said.
Arroyo, who is not related to President Gloria Macapagal Arroyo, said money sent home by Filipinos working and living abroad is now expected to register a modest increase, better than the previous central bank estimate of remittances merely matching last year’s record level of $16.4 billion.
Analysts expect remittances to grow 5.5 per cent this year, a reversal of a 0.5 per cent contraction predicted in July, a Reuters poll last week showed.
Remittances grew 3.8 per cent in the first seven months of the year from the same period in 2008, according to latest data from the central bank.
Tetangco has said he expects remittances to climb more than 3 per cent this year, fuelling consumer spending which drives more than two-thirds of GDP.
