Philippines' economic growth tops 6 per cent for fifth year

Exports rose 19.2 per cent in 2017 and central bank says figures confirm the underlying strength of the economy

Philippine president Rodrigo Duterte. The country has continued on its stellar growth trajectory. Noel Celis/EPA

The Philippines retained its position as one of the world’s fastest-growing economies after expansion exceeded 6 per cent for a sixth consecutive year.

GDPincreased 6.7 per cent in 2017, the Philippine Statistics Authority said in Manila Tuesday, matching the median estimate in a Bloomberg survey of economists. The economy rose 6.6 per cent in the fourth quarter from a year earlier, slightly lower than the 6.7 per cent median estimate, prompting the peso and stocks to drop.

The Philippines, one of this decade’s economic stars, is set to keep its momentum with the World Bank predicting growth of more than 6 per cent a year until 2019. The president Rodrigo Duterte is reforming tax laws to boost the nation’s competitiveness and raise revenue, while pushing ahead with an ambitious US$180 billion infrastructure programme that includes Manila’s first underground rail network.

“The growth is becoming a lot more sustainable than people expected,” said Alice Fulwood, an economist at UBS in Singapore. “We expect government stimulus and expansion of credit to facilitate an acceleration in 2018. We would be looking at inflation and balance of trade, if they deteriorate that raises a question mark on the sustainability of growth.”

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The peso, which has lost more than 2 per cent against the dollar this year to become the worst performer in Asia, fell 0.5 per cent to 51.08 as of 11:38am in Manila.

Consumer spending, which makes up about 70 per cent of the economy, rebounded last quarter, gaining 6.1 per cent from a year earlier, the fastest pace in a year. Government expenditure soared 14.3 per cent and investment increased 8.2 per cent.

The global trade recovery is boosting South East Asian economies, like Vietnam, which expanded 6.8 per cent in 2017. Philippine exports rose 19.2 per cent in 2017, the statistics office said.

Rapid expansion and a pick-up in inflation has fuelled speculation the central bank may raise interest rates as early as the first quarter this year. Governor Nestor Espenilla signalled last week he’s taking a cautious approach on tightening policy.

Commenting after the GDP data, Mr Espenilla said both the quarterly and annual growth figures confirm the underlying strength of the economy “that rests on increasingly balanced foundation”. That gives the central bank “ample policy space to stay focused on meeting its inflation target and pursuing ambitious financial sector reforms,” he said.