Philippines still Asia's fastest-growing economy after China
MANILA - The Philippine economy grew nearly twice as fast as expected in the fourth quarter from the previous three months despite a devastating typhoon, suggesting growth will remain robust this year and buffer the country from further turmoil in global emerging markets.
The latest growth data bolstered expectations the central bank will leave its policy rate steady at 3.5 percent at its Feb. 6 meeting, under no pressure to change rates in the face of the instability hitting other emerging market economies.
"We've been differentiated already by markets, but a contagion factor is unavoidable," said Nicholas Mapa, economist at the Bank of the Philippine Islands. "We are still in the best position to withstand any sharp reversal of capital flows given our reserves, our current account surplus."
Fourth quarter GDP grew a seasonally adjusted 1.5 percent in the October to December period, matching the second quarter's pace, the government's statistics agency said on Thursday, the fastest since 2.3 percent growth in the first three months of 2013.
A Reuters poll of economists forecast 0.8 percent growth.
From a year earlier, the economy grew 6.5 percent in the final quarter, above the 6.0 percent predicted by economists, making the Philippines the fastest-growing economy in Asia after China to date.
The fourth quarter annual GDP figure brought growth for the whole of 2013 to 7.2 percent, exceeding both the government's 6-7 percent target and market expectations of 7.0 percent. The 7.2 percent growth rate is the fastest since 2010 when growth was at 7.6 percent.
Industry was the main driver in the fourth quarter, posting 3.2 percent seasonally adjusted growth against 0.9 percent in the previous three month.
The data reinforces the central bank's assessment that the fundamental strength of the economy is intact, Governor Amando Tetangco said in a mobile text message to reporters.
"We will continue to monitor developments, including any 'noise' from temporary domestic financial market volatility, and act as appropriate to ensure inflation expectations remain well-anchored," Tetangco said.
The better-than-expected GDP data helped pare losses in the peso, which was quoted at 45.365 per dollar in mid-morning trade from a low of 45.42 earlier in the day.
The peso is Asia's worst-performing currency so far this year, having lost nearly 2.2 percent of its value versus the dollar.
Although the fourth quarter slowdown was widely anticipated, economists expect the impact of the storm on the economy will be manageable. The economy should also benefit from faster growth in advanced economies and typhoon rebuilding.
"We are optimistic the Philippine economy will remain strong in 2014, especially with the outlook for the global economy becoming favourable," economic planning chief Arsenio Balisacan told reporters.
"Our macroeconomic fundamentals are pretty robust compared to Indonesia, India, Thailand and we are in a good position to take advantage of the improvement in the global economy," he said.
Manila's main stock index is up more than 2 percent so far this year despite the emerging market selloff, while most others in Southeast Asia are in the red.
Typhoon Haiyan, one of the strongest tropical storms on record, tore through the centre of the archipelago on Nov. 8, killing at least 6,200 people, destroying homes, roads and bridges and flattening crops.
The massive rebuilding effort required after the disaster will help sustain strong growth this year, officials and analysts said. The budget agency said the government could spend 138 billion pesos ($3.1 billion) on rebuilding this year, more than 50 percent above the sum initially envisaged, as it seeks to build better structures and put in safeguards against future disasters.
The government is targetting growth of 6.5-7.5 percent this year, while the International Monetary Fund estimates 2014 GDP growth at 6.3 percent.