MANILA — The Philippine economy lost some steam in the second quarter but still
emerged as one of the fastest-growing in Asia, a performance that could draw
more money to its financial markets and force authorities to head off potential
asset-price bubbles.
The archipelago's economy grew in
the April-June quarter at an annual pace of 5.9%, despite strong headwinds from
the sputtering global recovery, Europe's debt crisis and slower growth in
China.
For the first half of the year,
the economy grew 6.1%, the National Statistical Coordination Board said—above
the government's target range of 5% to 6%.
"We are optimistic that the
resiliency of our economy, as reflected by the strong real GDP performance in
the two quarters of 2012, will not dissipate in the succeeding quarters despite
the uncertainties," Economic Planning Secretary Arsenio Balisacan told
reporters.
The reading failed to match the
first-quarter's pace, which was revised down to 6.3%. but it beat the 5.7%
median expectation of 11 economists polled by Dow Jones Newswires. The growth
numbers bolstered the peso, though the stock market seemed to focus more on the
weak sequential figure—GDP rose just 0.2% quarter-on-quarter. Shares ended the
day down slightly.
Still, the growth should be
enough to attract further foreign investment, said Wick Veloso, HSBC's managing
director for the Philippines and head of the bank's global banking and markets.
"That's still a high number
and one of the best growth numbers globally," said Mr. Veloso, adding that
he doesn't see any signs of overheating.
"The key infrastructure
projects are not even factored in yet," he said, referring to the
government's flagship public-private partnership initiative.
President Benigno Aquino III's
effort to improve governance and root out corruption has helped yield
several-credit ratings upgrades, free up resources to fund infrastructure
projects and attract strong capital inflows.
Those flows have buoyed the
Philippine stock market—now up 18% for 2012, among the best showings in
Asia—and pushed up the peso 3.6% against the U.S. dollar.
Bangko Sentral ng Pilipinas, the
country's central bank, has cut policy rates three times this year, most
recently in July, and tightened some investment rules to temper peso
appreciation. The BSP also has stepped up monitoring of banks' real-estate
exposure, seeking to close a potential window to asset-price inflation. It said
Thursday's growth data should further boost investor sentiment, bolstering
demand for peso-denominated assets.
"BSP will review the stance
of policy and calibrate any further action, taking into account, among others,
the impact of further acceleration in government spending...weaknesses in
global demand and possible further improvements in market sentiment toward peso
assets," Gov. Amando Tetangco asid in a statement.
Mr. Tetangco said the central
bank has "sufficient room in our policy tool kit to address these factors
to protect our inflation target."
Inflation remains low enough—just
3.1% in the first seven months of the year, well within the BSP's target rate
of 3% to 5%—that Mr. Balisacan predicted the central bank won't need to raise
interest rates this year.
If anything, most analysts expect
another rate cut.
Euben Paracuelles, an economist
with Nomura, says the economy doesn't need more easing—but he wouldn't rule it
out, saying the bank could cut the rate by 0.25 percentage point, mainly to
limit capital inflows and the associated upward pressure on the peso.
Maybank also predicted one last
cut of 0.25 percentage point, bringing overnight rates to fresh record lows of
3.5% for borrowing and 5.5% for lending.
"With the rate cut, BSP will
also slightly mitigate some of the strong upward pressure on the peso,"
the bank said in a research note.
But ANZ economist Aninda Mitra
said the most recent cut represents "policy insurance against external
headwinds," and predicted the bank will stand pat.
"We don't think the (GDP)
numbers will drive any near-term shifts in monetary policy for the remainder of
the year," she said.
The economy drew support largely
from government spending on construction—up 46% from a year earlier—and from
robust domestic consumption, supported by a 5.3% increase in remittances from
overseas Filipino workers. The slowdown from the first quarter was due mainly
to disappointing agricultural output, which accounts for about one-fifth of the
economy.
Mr. Balisacan said economic
growth next quarter should come in at the higher end of the government's target
of 5% to 6%, despite floods earlier this month on the main island of Luzon. He
estimated their impact as one-half of one percentage point.
Finance Secretary Cesar Purisima
said the government has fiscal space to sustain public spending.
"We will continue to invest
in the necessary infrastructure to boost investments, especially in
agriculture, tourism, and business process outsourcing," Mr. Purisima said
in a statement. "We will continue to provide support to further the
diversification of our exports."
Business & Investment Opportunities
YourVietnamExpert is a division of Saigon Business Corporation Pte Ltd, Incorporated in Singapore since 1994. As Your Business Companion, we propose a range of services in Strategy, Investment and Management, focusing Healthcare and Life Science with expertise in ASEAN. We also propose Higher Education, as a bridge between educational structures and industries, by supporting international programmes. Many thanks for visiting www.yourvietnamexpert.com and/or contacting us at contact@yourvietnamexpert.com
No comments:
Post a Comment