MANILA, Philippines - The economy will continue to grow at an “above-trend” pace, the Bangko Sentral ng Pilipinas said, citing a number of indicators led by the robust consumer demand.
“Newly available data suggest that the growth of the domestic economy is likely to continue at an above-trend pace, although capital flow volatility can create some challenges to financial markets in the near term,” the central bank said in its latest Highlights of the Meeting of the Monetary Board.
“The Philippine economy continued to expand at an above-trend rate in Q4 (fourth quarter) 2013, driven by strong household spending, exports, and capital formation on the expenditure side, and by solid gains in the services sector on the production side,” the BSP added.
The economy expanded by 6.5 percent in the fourth quarter, marking the eighth quarter it has grown above six percent.
This brought last year’s growth to 7.2 percent, surpassing the government’s target of a six to seven percent.
“The positive outlook for economic activity is expected to continue on the strength of consumer spending, as evidenced by the trend of various demand indicators,” the central bank said.
The government hopes to grow the economy by 6.5 to 7.5 percent this year and analysts have noted the strong inflows of remittances which last year accounted for almost 10 percent of the gross domestic product (GDP) will continue to support domestic consumption.
“Labor market conditions likewise improved, with the unemployment rate at 6.5 percent based on the results of the October 2013 Labor Force Survey from 7.3 percent in the previous quarter,” the BSP said.
“Meanwhile, manufacturing activity and exports have likewise been improving with the normalization of global trade,” the central bank added.
The International Monetary Fund, in its World Economic Outlook Update in January, has said recovery in advanced economies will drive global economic activity. The BSP noted that this will spur export demand and heighten trade activity.
“Consistent with these developments, results of the latest Senior Loan Officers’ Survey for Q4 2013 point to a sustained net increase in demand for loans from both enterprises and households,” the BSP noted.
“The outlook for domestic demand conditions is also likely to benefit from typhoon-related reconstruction and rehabilitation spending in 2014,” the central bank continued.