Economic managers downplay inflationary effects of Ompong

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Metro Manila (CNN Philippines, September 18) — ₱14.399 billion. That's the estimated damage Typhoon Ompong wrecked on agriculture, according to the latest estimate by disaster response officials.

But the economic managers of the Duterte administration are unfazed, and said that its inflationary impact would be temporary and minimal.  

"Inflation and the destruction brought by typhoons are going to be temporary, transient gusts of wind," said Socioeconomic Planning Secretary Ernesto Pernia in a press conference Tuesday.

This, despite food prices having a large impact on the rate of price increases, which reached a nine-year high of 6.4 percent last month.

"Based on the preliminary reports, the impact is basically isolated and confined to certain areas, so we don't see a generalized effect on the supply, logistics, and production," said Diwa Guinigundo, Deputy Governor for the Bangko Sentral ng Pilipinas.

"In respect to the rice industry, it is true that it is the lean season, harvest season is about to take place, but it was also reported that it some areas, they've started to harvest. So the impact on rice will be minimal, in respect to that," he added.

With the nation set to import more rice to make up for the damage wrought by the typhoon, economic managers are unfazed by the aftermath of Ompong. Pernia believes that speedy distribution and imports will alleviate supply concerns.

"We also have 15 million sacks of rice expected to arrive in 1 and a half  months. Importation for the fourth quarter is already being processed," Pernia said, adding that another 5 million metric tons of rice will be imported next year.

However, some analysts are unconvinced.

"The lesson from previous natural disasters is that there is likely to be a short-term negative impact on gross domestic product, followed by a rebound supported by reconstruction efforts," said London-based think tank Capital Economics in a statement. "Perhaps a bigger worry from an economic perspective is that 'Mangkhut' damages agricultural production, leading to an increase in food prices."

Economists polled by CNN Philippines are projecting higher inflation forecasts for September, as follows:

  • Carlo Asuncion, Chief Economist for Unionbank: 6.5 - 6.7 percent
  • Emmanuel Lopez, Dean of Letran Graduate School: 6.8 percent

Economic managers expect inflation to cool down next quarter despite higher consumer spending during the holiday season.

They have also submitted to the President an executive order for his approval that seeks to provide short term solutions to food supply woes.

CNN Philippines' Jil Danielle Caro and Paolo Barcelon contributed to this report.