Philippine economy seen growing 6.5-7.0% in Q1: Minister

Filipino workers arrange metal rods at a government road project in Manila in this Aug. 12, 2015 file photo. The Philippine economy is seen growing by 6.5 percent in the first quarter of the year. (AP file photo)

MANILA: The Philippine economy is expected to expand between 6.5 and 7.0 percent in the first quarter or faster, the economic planning minister said on Thursday, putting the government on track to meet its full-year target.
The Southeast Asian economy is among the world’s fastest growing with gross domestic product expanding by 6.8 percent in 2016, a three-year high.
Robust consumption and increased infrastructure spending, which spurred last year’s growth, continued to fuel economic activity, Ernesto Pernia told Reuters.
They should also bolster the country’s defenses against any economic fallout from Brexit, potential protectionist measures in the United States and divergent monetary policies around the world, Pernia said.
“First quarter growth will be in the neighborhood of 6.5-7.0 percent, maybe even more,” he said. The government has pledged to raise infrastructure spending to 5.2 percent of GDP this year from the projected 5 percent of GDP last year.
Pernia expects exports to perform better this year after declining 4.4 percent in 2016, as the government anticipates increased demand from China and Russia.
President Rodrigo Duterte has carried out a stunning U-turn in the Philippines’ foreign policy since assuming office last year, aggressively pursuing tighter business and defense ties with China and Russia and weaning the country off dependence on longtime ally, the US.
“China is ramping up its importation of (Philippine) products and Russia said it will increase its demand for agriculture products,” Pernia said.
China said on Wednesday it signed $1.74 billion worth of contracts to import Philippine products, such as fruits and lumber, during Vice Premier Wang Yang’s recent trip to Manila.
Pernia said full-year growth could be in the “midpoint” of the government’s 6.5-7.5 percent forecast range, bolstering expectations the central bank may raise rates for the first time this year in more than two years to temper rising inflation.
Annual inflation was 3.3 percent in February, the fastest pace in 27 months. While it remains within the central bank’s preferred range, the rate has moved closer to the top end of its 2-4 percent target.
The central bank is expected to keep its benchmark interest rate unchanged later on Thursday, but some economists said it would likely pull the rate-hike trigger at its next policy meeting in May.