MANILA (2nd UPDATE) - Growth in the Philippine economy picked up late in 2015 as strong domestic demand and government spending cushioned the impact of weak exports which are hurting many of its larger, trade-reliant Asian neighbors.
Even the severe El Nino dry spell, which hit farm output, failed to dampen the country's momentum much.
Southeast Asia's fifth-largest economy grew 6.3 percent in the fourth quarter from a year earlier, faster than the 5.9 percent economists had predicted and picking up from a revised 6.1 percent in the third quarter.
That brought full-year growth to 5.8 percent, national statistician Lisa Grace Bersales told a news conference, which could mark one of the strongest expansions in the world in turbulent 2015. China has reported 2015 growth of 6.9 percent and Vietnam 6.7 percent.
On a quarterly basis, the economy once known as "the sick man of Asia" grew 2 percent in the fourth quarter from the previous three months, slightly less than markets had expected but eclipsing China's 1.6 percent.
Economic Planning Secretary Arsenio Balisacan, meanwhile, said the growth figures are "respectable" amid a prolonged El Nino as well as several global risk factors from China and the US.
Government earlier set a full-year growth target of 7 to 8 percent, but admitted that it will be difficult to hit even the low end of that range after a slowdown in the first half of the year due to weak government spending.
"Though this is lower than what we targeted for the year, this growth is respectable given the difficult external environment, the onset of El Nino, and the challenges in government spending in the first semester," said Balicasan, adding that the 2015 growth was driven by a much stronger domestic demand.
"Government spending accelerated to 9.4 percent compared to last year’s 1.7 percent. Growth in public and private investments also more than doubled to 13.6 percent from last year’s 5.4 percent. This was primarily led by public construction, which grew by 20.6 percent from 6.3 percent in 2014," he said.
Balisacan also noted that the Philippine economy is among the fastest growing countries in Asia next to India, China and Vietnam. He said higher growth this year is expected as the global economy picks up.
"With sound fundamentals and ongoing structural changes in the economy that make it more resilient to shocks, we can expect higher growth for 2016 as the global economy also picks up," said Balisacan.
"We remain bullish. We are maintaining our expansion plans, opening new supermarkets, expanding our convenience stores and putting up new malls," said Leonardo Dayao, president of Cosco Capital, the parent firm of the Philippines' second largest supermarket chain Puregold.
Nearly $40 billion worth of inflows from business outsourcing contracts and millions of Filipinos working overseas flood into the Philippines every year, lifting incomes and spurring demand for property, cars, consumer goods and services.
"We continue to see no need to adjust policy settings at the moment, given the healthy Q4 GDP...and an inflation outlook of a slow creep to within target over the policy horizon," Bangko Sentral ng Pilipinas Governor Amando Tetangco said.
But in a sign that the consumption-led economy is not totally immune to the slowdown in China, Balisacan said the Philippines would likely miss the top end of its 7-8 percent target for 2016.
Philippine exports were down 5.8 percent in the 11 months to November last year due to sluggish demand from top trading partners Japan, United States and China.
Growth also should be boosted this year from campaign spending ahead of presidential elections in early May, though investors are likely to be cautious until the new leader's policies are clear.
Under outgoing President Benigno Aquino, the economy grew an average of 6.3 percent annually, helping cut the once stubbornly high jobless rate to a record low of 5.6 percent.
His efforts to collect more revenue by intensifying a campaign against tax evasion, as well as prioritizing infrastructure, helped win the country investment grade ratings from major credit agencies.
The Philippine economy grew 6.1 percent in the third quarter of 2015 from a year earlier. -- With Karen Lema, Reuters