Philippines takes China's crown as region's fastest growing economy
By Denise Roland
30 May 2013
A surprise surge in the Philippines economy in the first quarter has put its pace of expansion ahead of neighbouring giant China.
The south-east Asian archipelago hailed a "new growth trajectory" as its GDP expanded 2.2pc in the first three months of the year, to grow 7.8pc year-on-year, outpacing even the most bullish analysts' predictions.
Its growth comes amid a regional slowdown that saw the Chinese economy unexpectedly slow to 7.7pc growth in the first quarter. Vietnam, India and Thailand have also seen growth falter in recent months.
The Filipino statistical office said the quarterly growth is the highest since reformist President Benigno Aquino III took office in 2010. It is also the third consecutive quarter that the GDP grew more than 7pc.
Growth was robust on multiple fronts. Strong domestic consumption, fuelled by remittances from around 10 million overseas Filipino workers, drove enthusiastic private sector expenditure on equipment and buildings, which jumped 47.7pc year-on-year. Meanwhile, public spending on construction climbed 45.6pc as the government hiked up efforts to renovate dilapidated schools, roads and bridges.
All sectors contributed to the first-quarter growth, with services growing 7pc, industry 10.9pc and agriculture 3.3pc.
Borrowing costs have also come down for the government after both Fitch and Standard and Poor's raised the credit rating for Filipino bonds to investment grade earlier this year.
"Business confidence and optimism fuelled this growth," said economic planning chief Arsenio Balisacan, who added that the government hopes to achieve 7pc to 8pc annual growth by 2016.
"We may now be moving along a new growth trajectory."
Mr Aquino, who swept into power three years ago on promises to crack down on corruption and cut poverty, won control of the Congress this month, easing the path for further reforms in the second half of his term.
One of his main challenges will be to tackle the island chain's high unemployment rate, which at 7.1pc shows no signs of easing in the short term as job creation struggles to keep pace with a booming population. Furthermore the poorest and least skilled remain excluded from the highest growth sectors, such as call centre outsourcing.
Mr Balisacan said that the government understood that for growth to be inclusive, the poor must be linked to the growth industries.
"The faster this can be done, the better it will be for the greater number of our people," he said.
Philippines takes China's crown as region's fastest growing economy - Telegraph
