How Philippines could sustain GDP growth post Haiyan tragedy

Can it still afford to bear more burden?

According to DBS, some policy tinkering may be crucial to sustain the current pace of GDP growth. Various media reports suggest that the reconstruction efforts may be complicated due to a lack of insurance coverage in the affected regions.

Here's more:

Philippines continues to grapple with the devastation from typhoon Haiyan. Two of the worst affected provinces are both in the low-lying Eastern Visayas region. This region is largely agricultural. Cebu, in Central Visayas, was also affected and this is an important centre for outsourcing operations.

The economic impact from Haiyan is likely to be quite material. Total GDP for all the affected regions accounted for about 20% of the entire economy in 2012. 

Some initial estimates put total damages from typhoon Haiyan to be about USD 10-15bn. At this juncture, agriculture seems to be the worst hit. This is an important sector, employing 1/3 of total employment in the country. 

Expect fiscal expenditure growth to accelerate in the upcoming few months. Given the prevailing primary budget surplus, the government can still afford this.

On the monetary policy front, the BSP may now be less keen to raise its interest rates next year, as we have previously expected.