MANILA, Philippines (3RD
UPDATE) - The Philippine economy grew by 6.4% in the first quarter from an
upwardly revised growth of 4.9% last year, the government announced on
Thursday.
"This growth is well above the market’s consensus forecast of
4.8 percent. Also, the Philippines posted the highest growth among ASEAN and
other neighboring countries except China," Socioeconomic Planning
Secretary Arsenio Balisacan said.
ASEAN Q1 GDP growth
Philippines
6.4%
Indonesia
6.3%
Vietnam
4.3%
Singapore
1.6%
Thailand
0.3%
NON-Asean
Hong
Kong 0.4%
South
Korea 2.8%
Japan
2.8%
China
8.1%
The growth was attributed to to the government's strong
infrastructure spending and its conditional cash transfer (CCT) program.
Compared to the fourth quarter of 2011, the Philippine economy
grew by 2.5% in the first quarter, slightly below market forecasts, putting
pressure on the government to boost spending and raising the case for the
central bank to resume cutting rates later this year.
Balisacan expressed confidence the government can meet its
full-year GDP target, or even exceed it.
"Given the preliminary first quarter 2012 estimate, we expect
that the full year 2012 real GDP growth rate projection of 5% to 6% is well
within reach or may even exceed it," Balisacan said.
"At the same time, the government will not let up in its
efforts to accelerate the growth of the economy. For example, there is still
considerable room for faster acceleration in government spending. Also the
government will remain vigilant to risk to growth, including those posed by the
euro area woes and uncertainties in the world oil prices," he added.
The Philippines is targeting faster growth of 5 to 6 percent this
year against last year's 3.7 percent, fuelled by higher government spending, a
rebound in exports, and strong domestic consumption.
Balisacan said the first quarter performance serves as "a
springboard" for the next 3 quarters.
"The latest improvement on several governance and
competitiveness indicators, including Moody’s recent change of outlook on the
country’s Ba2 rating to positive from stable, indicate that our macroeconomic
targets for this year are achievable, given the synergy between the public and
private sectors," he said.
"Surprisingly strong"
Economists were surprised by the strong 6.4% year-on-year growth,
but there are questions as to whether this can be sustained.
Eugene Leow, economist at DBS Bank in Singapore, said the 6.4%
growth was "surprisingly strong," on the back of the government's
fiscal spending
"We do not think the growth momentum can be sustained because
of the troubles in Europe. April data from the region has also softened. The
6.4 percent year-on-year growth may raise fears of demand-push pressures but
inflation should be comfortably within the central bank's forecast range. There
is scope for easing if necessary but I don't think the central bank is ready to
push the trigger just yet. Our forecast is for the rate to stay unchanged this
year. The government also has room to introduce a fiscal stimulus if
needed," Leow said.
Jun Neri, economist at the Bank of the Philippine Islands, said
the strong pace of economic growth warrants an upgrade of the Philippines from
the major credit ratings agencies.
"Moody's and S&P, in particular, will take note of
stronger growth performance, as it will make the relative size of our debt much
smaller than overall output. Of course the question is the sustainability. It's
a big question mark, more so that headwinds particularly from peripheral Europe
are anticipated to have an impact on the remaining quarters of the year, which
again should compel our policymakers to sustain if not to continue to step up
on expansionary policies," Neri said.-ABS-CBN News (May 31,
2012)
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