MANILA, Philippines (UPDATE) - The Philippine economy expanded by 7.3% last year, the highest since democracy was restored to the country more than 2 decades ago, the government said on Monday.
Growth domestic product (GDP) growth in the last 3 months of 2010 also surpassed market expectations to reach 7.1%, the National Statistical Coordination Board (NSCB) said.
The recovery of the global economy played a big part in the strong performance by helping boost exports and revive key industries, while better weather towards the end of the year helped the struggling farming sector, it said.
"The global economic recovery which resulted in record growth rates of foreign trade... contributed to an economic performance in 2010 that well surpassed the government's target of 5% to 6%," the NSCB said.
The 7.3% full-year GDP expansion was the highest since at least 1986, when dictator Ferdinand Marcos was toppled in a peaceful revolution.
The strong growth came during a period of peaceful political transition for the Philippines, as Benigno Aquino easily won presidential elections in May last year and succeeded Gloria Arroyo as the nation's leader the next month.
The economy grew by just 0.9% in 2009, the lowest in 11 years, as the country struggled amid the global financial crisis.
Rebound in exports, agriculture sectors
Renewed global demand for the country's exports allowed industrial growth to accelerate to 8.3% in the final quarter of 2010, up from 3.8% during the same period the previous year, according to the NSCB.
The agriculture sector also rebounded to grow by 5.4% in the 3 months to December after storms and drought led to negative growth in the previous 4 consecutive quarters.
The government agency said businesses were investing more in durable equipment, which boded well for future economic growth prospects, although it did not give an official GDP forecast for this year.
Last week, the government said it expected the local economy had grown 7% to 7.4% in 2010, while growth in 2011 was seen to be "more modest" due to the absence of election spending.
Socioeconomic planning chief Cayetano Paderanga said they assumed a conservative 5% 2011 GDP growth target in the preparation for the national budget. However, they are hopeful a growth of 7% to 8% would still be achievable.
The Philippines and Indonesia remain the only countries in the region that have not raised interest rates since the end of the global financial crisis. The overnight borrowing rate has been at a record low of 4% since July 2009.
Bangko Sentral ng Pilipinas Governor Amando Tetangco said on Friday there was no pressure on the central bank to raise interest rates despite market worries over rising food, oil and transport costs. - With reports from AFP and Reuters