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Philippine economy outstrips expectations, is second-fastest in Asia, after China

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MANILA - (UPDATED 2:52 p.m.) The Philippine economy grew sharply in the first quarter of the year, creating 1.1 million jobs and making it Asia's second fastest-growing economy after China. 

The National Statistical Coordination Board on Thursday reported that the Philippines' gross domestic product grew by 6.4 percent in the January to March period, from the revised 4.9 percent expansion in the same period last year.

In a briefing, Socioeconomic Planning Secretary Arsenio Balisacan said the first-quarter growth is well above the market's consensus forecast of 4.8 percent, and the fastest in Asia except China, which expanded by 8.1 percent.

Within Asean, the Philippines' economic performance was above the region's average of 3.7 percent, growing faster than Indonesia (6.3 percent), Vietnam (four percent), Singapore (1.6 percent) and Thailand (0.3 percent).

Growth in other Asian countries likewise was slower: India (5.3 percent), Hong Kong (0.4 percent), Republic of Korea (2.8 percent), and Japan (2.8 percent).

In a research note, HSBC said growth "in most Asian countries grinded to a halt in the first quarter."

"But in the Philippines, the first quarter showed another strong uptick. This reflects policy makers' preparedness for anticipated weaker external demand in 2012, prompting them to boost domestic spending through fiscal and other policy measures," the bank said.

"Broad-based"

Balisacan said the first-quarter expansion was "broad-based," citing "services and industry sectors on the supply side and by net exports, household final consumption expenditure, and government consumption on the demand side."

Romulo Virola, NSCB secretary general, said the above-expectations growth benefited from benign inflation and drew from the revitalized services sector, particularly trade and other services.

Services expanded by 8.5 percent in the first quarter from 3.6 percent in the same period last year, while the industry sector rose 4.9 percent and agriculture, one percent.

"It also got a big boost from manufacturing which has recovered some ground that got eroded during the third quarter and fourth quarter," Virola said.

On the demand side, net exports - exports less imports - led growth at 5.2 percent, followed by consumer spending at 4.6 percent. Government spending, which increased 24 percent, contributed 2.3 percent to overall growth.

"Given the preliminary first quarter 2012 estimate, we expect that the full year 2012 real GDP growth rate projection of five to six percent is well within reach, or may even exceed it," Balisacan said, adding that growth generated 1.101 million jobs.

He said there is more room for government spending to increase, citing the potential contribution of public-private partnership projects.

Barclays Research said it was increasing its growth forecast for the Philippines.

"Given the strong first quarter GDP print and taking into account increased risks to global growth, we are raising our 2012 GDP growth forecast to 5.5 percent from 4.2 percent," Barclays said.

Highest in non-election year

Abigail Valte, Malacanang deputy spokesperson, said the country's first-quarter growth is also the highest in a non-election year since 2006.

"The first quarter GDP figure validates the optimistic outlook of the President and his economic team," she said.

"We are confident that the positive trajectory of our GDP will be sustained in the latter quarters of the year, which have traditionally shown more robust and dynamic economic performance," she added.

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