Philippines Defies Asia Slowdown as Growth Holds Above 7%
The Philippine economy expanded above 7 percent for a fourth straight quarter, defying a regional slowdown to remain one of Asia’s best performers as President Benigno Aquino boosts spending. Stocks rose.
Gross domestic product rose 7.5 percent in the three months through June from a year earlier, compared with a 7.7 percent gain in the previous quarter, the National Statistical Coordination Board said in Manila today. The median estimate in a Bloomberg News survey of 24 economists was 7.2 percent.
“The Philippines remains a bright spot in Asia,” said Jeff Ng, an economist at Standard Chartered Plc in Singapore. “While expansions in other countries are fading, Philippine GDP growth remains very much robust and we see growth persisting at above-trend levels. Infrastructure investment is imperative in sustaining the growth trajectory in the next few years.”
Philippine expansion matched China’s for a second quarter as the Southeast Asian nation withstands a regional slowdown that has prompted policy makers in Thailand, Malaysia and Indonesia to cut growth estimates. Aquino, who won control of Congress in May elections, plans to increase spending on roads and airports to a record next year to lure more investments.
The peso rose 0.3 percent to 44.6 per dollar as of 11:23 a.m. in Manila, according to Tullett Prebon Plc. The currency has fallen about 8 percent this year on concern the US Federal Reserve will scale back monetary stimulus, reducing the flow of funds to emerging markets. The benchmark Philippine Stock Exchange Index climbed 2.7 percent after sliding to an eight-month low yesterday.
Bangko Sentral ng Pilipinas is ready to supply dollar and peso liquidity if needed, and will participate in markets to temper volatility and if the peso moves out of line with regional currencies, Governor Amando Tetangco said this week. The central bank has held its benchmark interest rate at a record-low 3.5 percent since October, and cut the rate on its special deposit accounts three times this year to 2 percent.
The Philippines doesn’t need further stimulus and the outlook for the global economy suggests the use of caution in monetary policy, Tetangco said in July. Exports, which made up the equivalent of about 30 percent of the economy in 2012, fell in April and May before rebounding in June.
As the nation’s middle class expands, Jollibee Foods Corp., the Philippines’ largest fast-food operator, plans to open 100 stores locally and 100 overseas this year, Chief Financial Officer Ysmael Baysa said. San Miguel Corp., Ayala Corp. and JG Summit Holdings Inc. are investing in airports and railways.
Fitch Ratings and Standard & Poor’s awarded the nation its first investment-grade rankings this year, as Aquino increased state spending and cracked down on corruption. The Philippines may be among the world’s five fastest-growing economies this year and next, according to Bloomberg surveys. It will probably expand 6.9 percent in 2013 and 6 percent in 2014, they showed.
Thailand entered a recession last quarter for the first time since the global financial crisis, while Indonesia’s economy grew less than 6 percent for the first time since 2010. Malaysia this month cut its forecast for growth this year.
The Philippines is “likely to surpass its 2013 growth target” of 6 percent to 7 percent, Economic Planning Secretary Arsenio Balisacan told reporters today. The nation aims to increase infrastructure spending to 25 percent of its budget, Finance Secretary Cesar Purisima told Bloomberg Television.
The Philippine economy grew 1.4 percent in the second quarter from the previous three-month period when it expanded a revised 2.3 percent, today’s data showed. Government spending increased 17 percent from a year earlier, while construction jumped 17.4 percent and manufacturing gained 10.3 percent.
“The domestic economy is the engine behind these high levels of growth, insulating the Philippines from weak external demand,” said Eugene Leow, an economist at DBS Group Holdings Ltd. in Singapore. “The government has some room to respond in case the economy sputters.”