Philippine Growth Rises for Best Three Years Since Mid-1950s
BY :CECILIA YAP, SIEGFRID ALEGADO & KARL LESTER M. YAP
JANUARY 29, 2015
Philippine economic growth accelerated last quarter as government spending and manufacturing output rose, capping the best three years of expansion since the mid-1950s. Stocks rose to a record.
Gross domestic product increased 6.9 percent in the three months through December from a year earlier, the Philippine Statistics Authority said in Manila on Thursday, after a 5.3 percent gain in the previous quarter. That beat all estimates in a Bloomberg News survey of 19 economists, where the median was 6 percent.
President Benigno Aquino, who steps down in June 2016, has pledged to fix spending bottlenecks and raise outlays to a record to spur growth to as much as 8 percent this year and next. His efforts are receiving a boost from plunging oil prices, which are helping slow inflation and boost consumption in most emerging nations in Asia amid a cloudy global outlook.
“The key now is to accelerate infrastructure projects to expand the economy’s capacity and boost growth to the 7-8 percent level the government is targeting,” said Michael Wan, a Singapore-based economist at Credit Suisse Group. Low oil prices will keep inflation subdued, and “2015 should be another solid year,” he said.
The economy expanded 6.1 percent in 2014, compared with a 7.2 percent pace reported previously for the year earlier and 6.8 percent in 2012. That is the best three years of expansion since the mid-1950s, according to data compiled by Bloomberg.
The benchmark stock index climbed as much as 1 percent after the data, and slipped 0.1 percent as of 10:51 a.m. in Manila. The peso weakened 0.1 percent to 44.15 per dollar, according to Tullet Prebon.
Industrial production grew 9.2 percent in the fourth quarter from a year earlier and government spending increased 9.8 percent, the fastest pace in six quarters, according to data compiled by Bloomberg. Services expanded 6 percent.
“The government stood by its commitment to ramp up and catch up with its spending as we approached the last three months,” Economic Planning Secretary Arsenio Balisacan said at a briefing on Thursday. “The Philippine economy’s performance in 2014 and the preceding years starting in 2010 shows how our country can no longer be called the ‘sick man of Asia’.”
The International Monetary Fund last week raised its forecast for Philippine growth this year to 6.6 percent, even as it made the steepest cut to its global outlook in three years.
Philippine inflation may have eased in January to the slowest pace in five years, central bank Governor Amando Tetangco said on Wednesday. Bangko Sentral ng Pilipinas, which held the benchmark interest rate at 4 percent in December, is on guard against risks from diverging monetary policies and uneven growth globally, Tetangco said on Jan. 20.
“We remain vigilant against risks from the global front,” Balisacan said on Thursday. “Amid the lingering and uneven external conditions, the economy is likely to draw its vigor from the domestic front.”