The Taal Volcano eruption cost Batangas province P7.63 billion in economic losses as of Monday, by preliminary projections from the government planning agency NEDA. Socioeconomic Planning Secretary Ernesto Pernia put that at 0.3% of the growth of the wider Calabarzon region. Officials were careful to separate the two scales: a heavy local blow, a small national one.
The sector breakdown came from NEDA Undersecretary Adoracion Navarro. Agriculture, forestry and fishery may have lost P3.28 billion. Services lost about P4.32 billion, the larger share, and industry P27.16 million. The Department of Agriculture counted P577.39 million of farm damage in the region, covering about 2,772 hectares and 1,967 animals.
A second, lower tally
By Monday, January 20, NEDA’s preliminary assessment had been framed differently. Rappler reported foregone income of P4.31 billion inside the 14-kilometer danger zone, with agriculture and fisheries accounting for P3.17 billion, industry P357.3 million and services P789.1 million. Widen the radius to 17 kilometers and the figure rises to P6.66 billion; farming and fishing stay at P3.17 billion, while services drop to P711.9 million and industry climbs to P2.78 billion.
Those zones are small slices of the national economy. Pernia said the area within 14 kilometers produced 0.17% of Calabarzon’s gross regional domestic product, and the 17-kilometer area 0.26%. Calabarzon as a whole supplied a 17% share of national GDP in 2018, second to the National Capital Region at 36%.
What the officials said
“We don’t see it having a major effect unless there is a violent eruption,” Navarro said. The caveat matters. As of that Wednesday morning Taal sat at Alert Level 4, meaning a hazardous eruption could still come “within hours to days.” The island and high-risk areas inside the 14-kilometer radius, along with the Pansipit River valley, had been fully evacuated.
Outside economists agreed that the damage was local. Economist Victor Abola, speaking at a press briefing, called the impact so far “very localized.” Francisco Sebastian, chairman of First Metro Investment Corporation, said growth would not be threatened while volcanic activity stays where it is, because the economy is carried by domestic consumption and can grow in many other places.
Prices are the weak spot
If anything bends, it is food prices. Jun Trinidad, an economist at Philippine National Bank, warned that chicken, hogs and fish could come under pressure because Calabarzon is the second-largest source of live chicken and of hog supply. He expected the shock to show up in inflation rather than in demand, with 2020 inflation likely to break out of its usual band of 2-2.5% and settle at 3% or higher. Finance Undersecretary Gil Beltran said other regions were being tasked to cover the supply gap, which should soften the effect.
The government’s growth target for 2020 stood at 6.5% to 7.5%. NEDA said it was preparing a rehabilitation plan for the areas hit.
Sources
- Taal eruption may push prices of pork, chicken higher as supply tightens (BusinessWorld)
- Taal Volcano economic impact minimal so far, says NEDA (Rappler)
