Philippine Q2 GDP matches China, on course to surpass full-year goal
By Karen Lema, ReutersMANILA -- The Philippines matched China's expansion in the second quarter, becoming the two fastest growing economies in Asia, as strong fundamentals, domestic spending and investments buttressed the Southeast Asian nation from regional fund outflows.
August 30, 2013, 12:00 am TWN
Its solid growth performance lifted the peso from nearly 3-year lows and the stock market from 9-month lows, and better positions the Philippines to keep its favored status among investors amid market volatility.
The country has overtaken Southeast Asian neighbors such as Indonesia as a safer investment bet due to prudent management of fiscal and monetary policy. It secured investment grade from two ratings agencies this year.
But analysts warned that delays in public infrastructure projects could create uncertainty that might stall investments going forward as it seeks investors to bankroll construction of pivotal roads to railways.
Recent fund outflows from emerging markets due to Fed tapering fears may also lead to destabilizing capital flows in the economy, said Bernard Aw, analyst at Forecast PTE Ltd in Singapore. But most analysts say the country's strong current account, adequate forex reserves and lower export dependence differentiates it from its regional peers.
The economy grew an annual 7.5 percent in the second quarter, above a 7.3-percent market estimate, and compared with a revised 7.7-percent growth in the first quarter.
From the previous three months, GDP rose 1.4 percent in the second quarter, higher than the 0.8 percent forecast in a Reuters poll. It was the slowest pace in a year and below the upwardly revised growth of 2.3 percent in the March quarter.
Analysts expect the central bank to keep the policy rate on hold at a record low level of 3.5 percent after the data.