Taal Volcano's economic impact minimal so far, says NEDA

MANILA, Philippines – As long as Taal Volcano won't erupt violently, it won't affect much of the Philippines' economic growth, according to the country's chief economist.

Socioeconomic Planning Secretary Ernesto Pernia said on Monday, January 20, that areas within the 14-kilometer danger zone generated 0.17% of the gross regional domestic product (GRDP) of Calabarzon. If the radius were to be expanded to 17 kilometers, the GRDP of the area would be 0.26%.

"We don't see it having a major effect unless there is a violent eruption," said National Economic and Development Authority (NEDA) Undersecretary Adoracion Navarro.

NEDA's view was echoed by University of Asia and the Pacific economist Victor Abola, who said in a recent press briefing that the impact so far is "very localized."

First Metro Investment Corporation chairman Francisco Sebastian added that the country's economic structure is backed by domestic consumption and has plenty of other areas for growth. So long as volcanic activity does not escalate any further, Sebastian said overall growth won't be threatened.

Foregone income due to the Taal eruption has reached P4.31 billion, according to NEDA's preliminary assessment. Bulk comes from the agriculture and fisheries sector (P3.17 billion), followed by services (P789.1 million) and industry (P357.3 million). (READ: Taal Volcano ash wipes out bee pasture in Laguna)

The figures would go up if the danger zone's radius were to be expanded to 17 kilometers. Foregone revenue within the expanded area would reach P6.66 billion, with agriculture and fisheries still contributing to much of the losses at P3.17 billion. The services and industry sectors are estimated to lose some P711.9 million and P2.78 billion, respectively.

The area surrounding Taal Volcano has great economic significance to the region. The lake, with an area of approximately 239 square kilometers, provides livelihood through fisheries and tourism.

The government is aiming for the country's gross domestic product to grow by 6.5% to 7.5% in 2020.

NEDA is now developing the rehabilitation plan for areas affected by the Taal eruption.

A week since Taal Volcano started erupting in the province of Batangas, Alert Level 4 remains raised, which means a hazardous eruption could still occur "within hours to days." (READ: Taal Volcano's 2020 eruption: What we know so far) – Rappler.com

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

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