The Philippine economy grew 7.1 per cent in the third quarter year-on-year, exceeding expectations and making it the best performer in Southeast Asia.
The country’s economic growth was the strongest in Asia during the period after China’s.
“We are well on our way to surpassing our growth target of 5 to 6 per cent this year,” Socioeconomic Planning Secretary Arsenio Balisacan told reporters yesterday.
Balisacan said the high growth of the gross domestic product (GDP), the value of goods produced and services rendered in a given period, was expected to translate to more jobs and better incomes for Filipinos.
A jump in third-quarter farm output and a late rebound in exports also contributed to the economy’s 1.3-per cent growth rate in the July-September quarter from April-June, which was three times as fast as economists had predicted.
Robust domestic consumption and higher government spending have helped cushion the economy from the worst of the global slowdown, while manageable inflation has allowed authorities to keep interest rates conducive to growth.
The country is the only economy in the world which the International Monetary Fund (IMF) believes will grow faster than earlier expected this year.
Earlier this month, the IMF raised its 2012 growth outlook for the Philippines to more than 5 per cent from its October forecast of 4.8 per cent, citing its sound fiscal and monetary policies.
‘Diamond’ of region
“The Philippines is the diamond of the region this year,” said Enrico Tanuwidjaja, economist for Southeast Asia at RBS in Singapore.
Indonesia was the second-best performer in Asean with 6.2 per cent growth, followed by Malaysia (5.2 per cent), Vietnam (4.7 per cent), Thailand (3 per cent) and Singapore (0.3 per cent). China posted a 7.7-per cent GDP growth.
Balisacan said the third-quarter performance of the Philippine economy was way above the market’s media forecast of 5.4 per cent.
The growth momentum is expected to continue next year as government works to ease the cost of doing business and as more infrastructure projects under the private-public partnership scheme get underway, he said.
Record infra budget
The government has set a record infrastructure budget of over 400 billion pesos (US$9.7 billion) next year as it pursues major upgrades of roads, ports, bridges and airports to speed up growth and boost private investment.
Balisacan said these along with finance department’s tapping of the country’s record foreign reserves to pay its foreign debts would ease the upward pressures on the peso next year.
The peso is Asia’s best performing currency so far this year, up more than 7 per cent against the US dollar on strong foreign inflows into Philippine stocks and bonds, fuelled by forecasts of sustained and resilient domestic growth.
Year-to-date growth is already at 6.5 per cent with services and industry (except mining) still driving growth.
Officials said the full-year growth would likely beat the target of 5 to 6 per cent and move toward the previously “aspirational” 7-8 per cent needed per year to spur employment and curb poverty.
A strong BPO sector, booming construction, increased consumer and government spending, and external trade contributed to the highest quarterly growth since 2010, said
Jose Ramon G. Albert, secretary general of the National Statistical Coordination Board.
among industries, construction posted its highest growth in at least six quarters, jumping 24.3 per cent from a year earlier as Metro Manila enjoys the best property boom in two decades.
Public consumption expanded an annual 12 per cent in the third quarter, almost double the rate in the second quarter.
Relatively stable prices, steady inflow of remittances, and rebounding exports supported growth, according to the National Economic and Development Authority (Neda).
While export receipts of semiconductors and electronic data processing equipment contracted, both items contributed recently to increased imports, which may mean that manufacturers have been “stocking up” on intermediate inputs in anticipation of recovery in the global demand for electronic products, Neda said.
Agriculture also fared better in the third quarter than in the four previous quarters with increased rice and corn outputs as part of efforts to achieve food self-sufficiency. The weak fishery sector is a concern, however, Balisacan said.
In a briefing, presidential spokesperson Edwin Lacierda attributed the high growth rate to “sustained confidence in the leadership of President Benigno Aquino III and his administration, which has consistently equated good governance with good economics.”
Aquino, who was elected in 2010, has instituted anticorruption reforms while seeking to boost revenues and improve government spending.
“The Philippine economy has shown both resilience and resurgence despite the global economic slowdown,” Lacierda said.
Finance Secretary caesar Purisima said confidence in the way the government was being run had encouraged more people to do business in the country.
“The growth rate shows that the economics of good governance, or ‘Aquinomics’ works,” Purisima said in a statement.
The Makati Business Club (MBC) lauded the strong third-quarter performance.
“Good governance is paying off. President Aquino and his economic team must be lauded,” MBC executive director Peter Perfecto said via text message.
Trade Secretary Gregory Domingo said in a phone interview that he was “not surprised” by the 7.1-per cent growth for the third quarter because the country was coming from a low growth base.
In the third quarter of 2011, the economy turned sluggish as exporters and other contributors to the economy felt the impact of the triple tragedy in Japan and the flooding in Thailand earlier that year.
“Nevertheless, it is good to post this level of growth for the third quarter. We will continue to help our business people with shared facilities, simplifying and shortening the process of starting a business, and educate entrepreneurs as well as students on how to take advantage of free-trade agreements.
Budget Secretary Florencio Abad said the latest indicators showed that the country faced “very fruitful times ahead” with low inflation and interest rates and increased confidence in government reforms.
Christmas, poll spending
Abad said growth was likely to stay robust in the fourth quarter.
“Public consumption will most definitely stay robust, fuelled by high consumption levels during the holidays, continuing investments in public and private infrastructure, and the kick-start of election-related spending this Christmas season,” Abad said in a separate statement.
Abad said this would improve the country’s credit rating further. Both Moody’s and Standard & Poor’s raised the Philippines’ credit ratings to within one rung of investment grade in recent months.
However, Balisacan said there were still external threats such as the “looming fiscal cliff” in the United States and the long-running eurozone crisis.
He also said the government was closely watching the strengthening peso, which could hurt exporters’ competitiveness.