MANILA, Jan 31 — The Philippine economy grew faster than expected in the last quarter of 2012 on robust domestic demand, bolstering expectations the central bank will keep its key policy rate steady at a record low in the early part of the year.
Gross domestic product rose 1.5 per cent in the December quarter from the previous three months, compared with a market forecast of 0.6 per cent and after revised 1.7 growth in the third quarter.
Increases in private and public spending, which helped offset sluggish demand for exports have kept the Philippines, like many of its neighbours in Southeast Asia, resilient in 2012 despite global headwinds.
“It is our immediate task to put in place policies and implement programmes that will sustain our economy’s growth over the medium term,” Arsenio Balisacan, economic planning secretary, told reporters.
“We shall continue planting the seeds of a structural transformation in our economy to make it more investment- and industry-led,” he said.
Balisacan also said economic managers were discussing ways to address the impact of a strong peso on the economy.
From a year earlier, the economy rose a faster-than-expected 6.8 per cent and against revised 7.2 per cent annual growth in the September quarter, the economic planning agency said.
Officials expect the Philippines’ growth momentum to be sustained this year as the government pursues investment in infrastructure through public-private partnerships.
The International Monetary Fund has raised its 2013 economic growth forecast for the Philippines to 6 per cent, and it expects the economy to grow at a robust pace of 5.5 per cent in 2014.
With the positive growth outlook, the majority of economists in a Reuters quarterly poll released this month expect the central bank to keep interest rates steady until the third quarter of the year.
Economists in the same poll estimate 2013 growth will slow to 5.6 per cent. While the forecast is below the government’s 6 to 7 per cent target this year, it is higher than the growth estimates for Malaysia, Thailand, Vietnam and Singapore.
The central bank has trimmed its forecast for average inflation in 2013 to 3.0 per cent from 3.1 per cent but raised its 2014 forecast to 3.2 per cent from 2.9 per cent.
Central bank Governor Amando Tetangco has said interest rates will likely remain low this year with a benign inflation outlook. — Reuters