The Philippine economy clocked forecast-topping growth of 6.9 percent in the third quarter, making it one of Asia’s fastest growing and building expectations for a near-term increase in interest rates.
The on-year growth, which was above the 6.5 percent forecast in a Reuters poll and outpaced China’s 6.8 percent increase in the same period, was driven by strong industrial and services output, the statistics agency said on Thursday.
Despite central bank arguments that current monetary policy remains appropriate, economists see growing price pressures from the strong demand increasing the likelihood of policy tightening.
Economic Planning Secretary Ernesto Pernia said he was optimistic the government’s 6.5-7.5 percent growth target for 2017 would be met, supported by higher state spending and improving exports and farm output.
“We are on track to meeting the full-year target range ” Pernia said in a media briefing.
Investors cheered the data, with Manila’s benchmark share index .PSI up as much as 0.5 percent at around 0300 GMT while the peso rallied to as high as 50.875 per dollar from Wednesday’s close of 51.04.
Quarter-on-quarter growth of 1.3 percent was below the 1.6 percent forecast in a Reuters poll and weaker than the previous quarter’s upwardly revised 2.0 percent.
Like its peers in Asia, the Philippines is benefiting from the steady rebound in exports, which were up 12.2 percent in the nine months to September.
But economists have flagged Philippine President Rodrigo Duterte’s war on drugs and “erratic policymaking” as potential risks that could weigh on investor sentiment.
“It is notable that foreign direct investment has dropped off this year, while investment growth has continued to weaken,” Capital Economics said in a note.
Duterte has pledged to modernize the country’s airports, roads, railways and ports through a six-year $180-billion, “Build, Build, Build” initiative to attract much-needed foreign direct investment and lift economic growth.
Government consumption in the third quarter rose 8.3 percent from last year, faster than the previous quarter’s 7.1 percent, helping offset cooling household demand.
Growth in capital formation weakened to 6.6 percent in July-September, from 8.5 in the June quarter.
read more : from reuters