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.
With Reuters
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