MANILA - (UPDATE) The economy grew 6.9 percent in the July to September period, beating expectations and accelerating from the previous quarter, official data released Thursday showed.

This makes the Philippines Asia's second-fastest growing economy in Asia, next only to Vietnam, in the third quarter, Socioeconomic Planning Secretary Ernesto Pernia said.

"That's spectacular growth after an election year," Pernia said.

The third quarter growth compared to the 6.7 percent expansion in the second quarter and 7.1 percent during the same period in 2016.

The median forecast of a Bloomberg poll predicted third quarter GDP growth at 6.5 percent, while a Reuters survey placed it at 6.5 percent.

Pernia said the economy was on track to meet its full year growth target of 6.5 to 7.5 percent.

"We attribute the country's growth performance to sustained growth in exports," Pernia said, adding net exports grew "very fast" during the third quarter.

Government's plan to build new roads, railways and airports will "ratchet up" public spending, he said.

"We are now seeing a sustained improvement in government spending in the run-up to our massive infrastructure program, build build build which will continually unfold in the months ahead," he said.

Investors cheered the data, with Manila's benchmark share index up as much as 0.5 percent after the announcement while the peso rallied to as high as 50.875 per dollar from Wednesday's close of 51.04.

Quarter-on-quarter growth of 1.3 percent was below the 1.6 percent forecast in a Reuters poll and weaker than the previous quarter's upwardly revised 2.0 percent.

"It is notable that foreign direct investment has dropped off this year, while investment growth has continued to weaken," Capital Economics said in a note.

Duterte has pledged to modernize the country's airports, roads, railways and ports through a six-year $180-billion, "Build, Build, Build" initiative to attract much-needed foreign direct investment and lift economic growth.

Government consumption in the third quarter rose 8.3 percent from last year, faster than the previous quarter's 7.1 percent, helping offset cooling household demand.

Growth in capital formation weakened to 6.6 percent in July-September, from 8.5 in the June quarter.

TOO HOT?

After the data's release, Philippine central bank governor Nestor Espenilla sought to allay concerns of overheating.

"That begins to be a concern if we're persistently growing above potential," Espenilla told reporters. "To keep growing strongly without overheating, we expand potential itself - through high quality investments funded in a sustainable manner."

Espenilla said the strong economic growth and "manageable inflation are in line with our expectations and validate current policy settings."

However, some economists expect the central bank to raise the benchmark rate from the current 3 percent as early as next month to head off inflation, which has been creeping towards the upper end of the 2 to 4 percent target for 2017 to 2019.

"Further recent rises in world oil prices combined with robust GDP growth and rapid growth in consumer credit signal that the Bangko Sentral ng Pilipinas will have a tightening bias in its monetary policy stance," said Rajiv Biswas, chief economist for Asia Pacific at IHS Markit.