While typhoons have caused damage and affected Filipino communities, their impact on the country’s gross domestic product (GDP) has been limited, according to London-based think tank Capital Economics.

“Typhoon Haiyan in the Philippines in 2013 caused over 10,000 deaths, yet the effect on GDP was limited,” said Capital Economics senior Asia economist Gareth Leather in a Dec. 3 report, referring to super-typhoon “Yolanda,” which had flattened central Philippines.

“The human cost is tragic,” Capital Economics said, noting that large parts of South and Southeast Asia have been battered by tropical storms in recent weeks, causing widespread disruption and loss of life. Economically, however, the think tank said that “the impact is likely to be limited, as the region’s main industrial and commercial centers have largely escaped the worst of the damage.”

Capital Economics emphasized that in the Philippines, Visayas and Mindanao were the hardest-hit regions, with floods and landslides disrupting local transport and services.

The think tank added that recovery frequently follows once immediate typhoon damage eases.

“Once the worst of the disruption passes, a rebound often follows, aided by pen-up demand,” the think tank said.

Capital Economics also highlighted that “reconstruction can provide a further boost to growth,” noting that natural disasters affect economic growth in several ways, initially disrupting production, commerce, supply chains, and tourism.

Despite overall resilience, agriculture is expected to bear the brunt of the damage, as flooding and crop losses are likely to drive food prices higher across the region. The think tank warned this could create “an upside risk” to inflation in affected economies.

However, the think tank noted that regional inflation is starting from a low base.

“[Inflation] is at or below target across most of the region. We are therefore sticking with our view that central banks will maintain a dovish stance, with further rate cuts likely in the months ahead,” the think tank added.

As flooding disrupts communities across the country amid an ongoing infrastructure corruption scandal, the think tank warns this could intensify public outrage and push the government toward a firmer response.

“Perhaps of more significance in the Philippines is the political backdrop,” it said, pointing to the corruption scandal centered on flood-control projects.

Last November, an anti-corruption protest dubbed the “Trillion Peso March” was held across the county as investigations into “ghost“ and substandard flood-control projects involving government officials and politicians intensified.

Last week, Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said that the Philippines is expected to miss its full-year GDP growth target for 2025, following the sharp slowdown in third-quarter expansion to a 4.5-year low of four percent amid a worsening corruption scandal.

He added that reaching even the lower end of the government’s 2025 target is “very unlikely.”

The government had already downscaled its 2025 growth goal to a range of 5.5 to 6.5 percent, from an originally more ambitious six to eight percent.

(Ricardo M. Austria)