Philippine economic growth accelerated for a second straight quarter as rising consumer and government spending helped the nation cushion an export slowdown that has hurt expansions across Asia.
Gross domestic product rose 3.7 percent in the fourth quarter from a year earlier, after a revised 3.6 percent increase in the previous three-month period, the National Statistical Coordination Board said in Manila today. The median estimate of 12 economists surveyed by Bloomberg News was for a 3.8 percent gain.
Bangko Sentral ng Pilipinas lowered its benchmark rate this month, the first cut since 2009, joining emerging markets from Brazil to India in easing monetary policy to fight the threat of a global recession. President Benigno Aquino is widening the budget deficit this year as he increases spending to a record to help boost growth to as much as 8 percent annually.
“This acceleration eases some pressure on the BSP to stimulate growth through monetary policy,” said Trinh Nguyen, a Hong Kong-based economist at HSBC Holdings Plc, who predicts the central bank will keep rates unchanged at its next policy meeting in March. “Most of the growth will continue to be very domestically derived as exports are still unlikely to recover.”
The report also showed annual GDP in 2011 grew 3.7 percent, matching economists’ estimates, compared with a revised 7.6 percent expansion a year earlier and with a government target of at least 4.5 percent.
The Philippine Stock Exchange Index rose to a record Jan. 24 and is the best performer among Asia’s benchmark indexes tracked by Bloomberg in the past six months as investors bet policy makers will take steps to stimulate growth amid faltering global demand. The index fell 0.8 percent today after the report.
Benchmark bond yields due January 2018 fell to a five-week low, according to Tradition Financial Services. The peso fell 0.2 percent to 42.915 per dollar, according to Tullett Prebon Plc.
Bangko Sentral will ensure that monetary policy settings are “appropriately accommodative of non-inflationary growth,” Governor Amando Tetangco said in a mobile-phone text message after the report. The monetary authority will “assess the growth prospects of our major trading partners and their impact on our domestic growth and inflation dynamics.”
Growth in Asian economies is weakening as the two-year sovereign-debt crisis which started in Greece reduced demand for the region’s goods. Taiwan’s GDP probably increased 2.8 percent in the fourth quarter, the slowest pace in more than two years, according to the median estimate in a Bloomberg News survey ahead of a report tomorrow.
South Korea’s economy grew the least in two years last quarter and China reported this month its weakest expansion in 10 quarters. Philippine exports, which are equivalent to about 30 percent of the economy, tumbled for a seventh month in November.
The government is keeping a goal of expanding the economy by 5 percent to 6 percent this year, Economic Planning Secretary Cayetano Paderanga said today after the report.
Aquino is accelerating a plan to seek investments in mass rails, roads, and airports to upgrade the nation’s infrastructure to compete with its Southeast Asian neighbors. The government may offer as many as 16 projects to investors this year, compared with one contract awarded in 2011.
“The government and the central bank are taking the right steps,” Eugene Leow, an economist in Singapore at DBS Group Holdings Ltd., said before the report. “It’s all part of a coordinated strategy to push up domestic demand in light of weak external conditions.”
The Philippines has won sovereign-rating upgrades from Fitch Ratings and Moody’s Investors Service after intensifying efforts to raise revenue and boost growth. Standard & Poor’s raised its outlook on the country’s debt rating last month.