Restoration in ‘Odette’-hit areas to counter economic impact

MANILA – Devastation in some parts of the Visayas and Mindanao wrought by Typhoon Odette is expected to hit economic recovery but restoration activities in the coming days can counter its economic impact.

 

In a report released on Monday, Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said damage to agriculture and productivity losses are the visible effects of the recent typhoon that hit the country.

 

To date, many affected areas remain to have issues on electricity and telecommunication services, are experiencing shortages in water and fuel, as well as the delayed movement of goods and people because of damaged infrastructure. 

 

“There may also be temporary loss of jobs/employment and other economic activities until some reparation/restoration is already in place to allow resumption of business and other economic activities,” Ricafort said. 

 

The vaccination program in the typhoon-hit areas will also be affected, he said. 

 

Ricafort also expects temporary upticks in prices in the devastated areas thus, a negative for the inflation rate and gross domestic product (GDP).

 

“However, reparation/rehabilitation/restoration activities of areas hit by storm damage would ironically add to economic activities, just like in large storm damage in the past,” he said, citing results of past recovery programs. 

 

The restoration programs, he added, are expected to increase “economic activities and paradoxically, some pick up in GDP growth as an important offsetting factor.” 

 

“The expected increase in the demand for repairs and purchases to replace damaged businesses, homes, vehicles, appliances, furnishings, infrastructure/facilities, and other property would spur greater business/economic activities; somewhat effectively offsetting the outright typhoon damage/losses on the economy,” he said. 

 

Ricafort, however, said recovery by some businesses, households, and other institutions will take longer and is seen to exacerbate the situation. 

 

This, he said, will require greater intervention/support measures from the government, thereby could widen the budget deficit and add to the country's debt stock.

 

“As a rule of thumb, every PHP20 billion damage/losses due to the storms/typhoons is equivalent to about 0.1 percent of GDP,” he added. (PNA)