More than GDP, other statistics, pay close watch on prices

TAAL Volcano’s eruption is bound to have a negative impact on the national economy, but it will not be enough to prevent the attainment of the government’s 2020 economic growth goal of 6.5 to 7.5 percent this year, Socioeconomic Planning Secretary Ernesto Pernia, chief of the National Economic and Development Authority (NEDA), said Tuesday.

Taal had just erupted with ash-bearing smoke billowing a thousand meters up in the sky. The ash fell on a wide area around the volcano, some blown northward by winds. Much of it fell back to earth where it covered the roofs of houses, trees, and fields of grain and other crops. There were also some 200 earthquakes, which caused cracks in concrete roads and houses.

Government economic officials said they expect some effect on local production as measured by Gross Domestic Product (GDP), but their greater concern is the risk of inflation. The calamity could lead to the severe reduction of supplies of food and other agricultural products, Secretary Pernia said, and this in turn could lead to increased prices of food, coffee, and other basic commodities, as well as transport. Prices of utilities such as electricity and clean water may also increase, he said.

The government is naturally concerned with the GDP as this is the measure of the progress of the national economy. It is the means by which the country’s economic advance is calibrated in comparison with other countries. It is the figure international investors look at when they scout around for places in which to invest their funds.

But more than GDP, we hope the national government will be watching the other figure – market prices – more closely in the wake of Taal volcano’s eruption. There has been a diminution of supply – especially of food. Wide areas of rice and other farms have been covered with ashes. Many farmers have fled with their families to safe areas away from their productive tasks.

The Department of Health has also warned against eating food from Taal Lake – and this includes the well-known tawilis – as the volcanic eruption has released toxic materials into the surrounding water. More than a health problem, the tawilis problem will deprive so many people living around the lake of the only food they can afford.

There will be time enough later this year to rehabilitate the farms and fishing, and repair the damage to various industries, including tourism which was particularly thriving in Taal. For now, we hope the government will concentrate on the prices and supply of the most basic needs of the people, the most important of which is food.