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May 31, 2012 11:08 am
The Philippine economy beat expectations and expanded by 6.4 per cent in the first quarter to become one of east Asia’s top performers, boosted by services such as tourism and business outsourcing, as well as consumer and government spending.
Analysts had been pessimistic as exports, which make up around 35 per cent of economic output, had begun to slip in March. With demand from Europe and Asia slowing, they had projected growth in the first three months of the year of around 4.5 per cent.
Instead, the country posted the highest first-quarter economic growth in east Asia except China, said Arsenio Balisacan, the Philippines’ economic planning chief.
Euben Paracuelles, an analyst with Nomura, said the country had enjoyed “no shortage of good news” this week. In addition to the strong gross domestic product data, Moody’s earlier changed its outlook on the country to “positive” from “stable”.
“Such pace of growth is unlikely to be replicated in the coming quarters,” he wrote in a note. “But . . . we think the reform momentum is strong enough to provide a further lift to public sector spending but also, importantly, private investment.”
The surprisingly strong economic numbers will probably help Benigno “Noynoy” Aquino, the president, deal with criticism that he has been neglecting the economy and focusing too much on corruption allegations against Gloria Arroyo, the former president, and her top officials and aides.
The former leader is now in detention and on trial for poll rigging and graft. The chief justice, whom she had appointed, was recently convicted and ousted from his post after the Senate found him guilty of failing to report substantial deposits in his asset disclosure statements.
Economic growth slowed during Mr Aquino’s first year in power, from July 2010, dropping from 8.9 per cent in Mrs Arroyo’s last quarter in office to a low of 3.2 per cent in the third quarter of last year.
“After four quarters of lacklustre performance, the Philippine economy is off to a rousing start in the year of the water dragon,” said a government statement.
Consumer spending, which makes up about half of GDP, rose by 6.6 per cent, supported by remittances from overseas Filipinos. Government spending surged by almost a fourth as officials completed many of the reviews that slowed outlays in the past.
Fast growth in transportation, communication, and wholesale and retail trade also bolstered the economy. The services sector overall expanded 8.5 per cent in the first quarter, its strongest showing in more than two years. With the number of visitors up by 16.6 per cent, tourism helped push services exports up 11.1 per cent.
That offset a slowdown in electronics shipments that dragged goods exports growth to only 7.1 per cent.
Though global economic woes are expected to knock demand for Philippine exports, Mr Balisacan said the country will probably exceed the government’s target GDP growth rate of 5 to 6 per cent in 2012 “given the scope for more acceleration in government expenditure and buoyant consumer and business confidence”.
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