Philippine Growth Climbs as Asian Economies Recover
Philippine economic growth accelerated in the second quarter from the slowest pace in a decade, adding to signs Asian nations are recovering from the global recession. Stocks rose.
Gross domestic product increased 1.5 percent from a year earlier, the National Statistical Coordination Board said in Manila today. That was three times the 0.5 percent median forecast of 17 economists surveyed by Bloomberg News. The economy expanded a revised 0.6 percent in the first quarter, the weakest pace since a recession ended in 1998.
Record-low borrowing costs and government stimulus are helping Asian nations from Thailand to Singapore report better second-quarter economic numbers. Philippine President Gloria Arroyo has boosted spending to avoid a recession and help companies including SM Investments Corp. survive the slump.
The government’s “stimulus programs have been successful in preventing a slowdown,” said Jonathan Ravelas, a market strategist at Banco de Oro Unibank Inc. in Manila. “They should continue to pump prime to create the necessary conditions for sustainable economic growth.”
The Philippine Stock Exchange Index rose 0.5 percent as at 11:14 a.m. in Manila, compared to a 0.8 percent decline in the MSCI Asia Pacific Index. The peso pared declines and traded at 48.885 per dollar as of 11:04 a.m. from 48.93 before the report was issued, according to Tullett Prebon Plc. The government’s benchmark five-year bonds dropped a second day.
Avoid Recession
“The government’s economic resiliency plan resuscitated the domestic economy during the second quarter,” Romulo Virola, secretary general at the statistical board, said in Manila today. Economic Planning Secretary Augusto Santos said the Philippine economy will escape a recession and is “on track” to achieve a 1.8 percent growth rate this year.
The government predicts expansion in the $167 billion economy will improve in the second half of the year as the global slowdown eases and state spending kicks in. The central bank kept its benchmark interest rate unchanged at a record low of 4 percent last week after slashing borrowing costs by 2 percentage points from mid-December to July.
“They have done much easing,” said Economic Planning Director Dennis Arroyo. “It’s time for fiscal policy to work.” The Philippine economy may grow more than the government target of 3.6 percent next year because the global recession is ending faster than expected, he said.
‘Worst is Over’
Consumer spending, which accounts for about 70 percent of the economy, rose 2.2 percent last quarter from a year earlier. The “worst is over” for the country’s retailers and the industry will grow moderately this year, the Manila Times cited Philippine Retailers Association Chairman Jorge Mendiola as saying Aug. 14.
SM Investments, whose assets include the Philippines’ biggest bank and largest shopping mall operator, said profit rose 16 percent in the second quarter as people spent more at its supermarkets and department stores.
Exports of goods and services by companies including Intel Corp., which account for about a third of the Philippine economy, dropped 16 percent in peso terms in the second quarter from a year earlier. The decline in Philippine exports narrowed to the least in seven months in June as the region showed signs of recovery.
China’s growth accelerated in the second quarter for the first time in more than two years after the government implemented a 4 trillion-yuan ($585 billion) stimulus plan and prodded banks to lend more. Singapore last month raised its 2009 economic forecast, predicting the economy will shrink 4 percent to 6 percent this year, less than earlier estimates.
Malaysia’s economy shrank a less-than-expected 3.9 percent in the three months ended June from a year earlier, easing from a 6.2 percent contraction in the first quarter, the central bank said yesterday. Thailand said this week its recession eased last quarter on government spending and improving export orders.
Filed under: finance by Wolf