Philippine economy grows a stunning 7.8%

Driven by strong manufacturing and construction sectors, the first-quarter growth was the highest since President Benigno Aquino III took office in 2010, Jose Ramon G. Albert, secretary general of the National Statistical Coordination Board, said Thursday.

Aquino's allies won majorities in both houses of Congress in midterm elections early this month, making it possible for him to proceed with his legislative agenda in his remaining three years in power.

"Business confidence and consumer optimism fuelled this growth, [erasing] doubts cast on the 2012 figures that [they were] due to base effects only," said Socioeconomic Planning Secretary Arsenio M. Balisacan.

Helped by increases in government and consumer spending, the year-on-year growth exceeded public and private forecasts, outpacing China (7.7 per cent), Indonesia (6 per cent), Thailand (5.3 per cent) and Vietnam (4.9 per cent).

The Palace raved about the unexpected growth, but said it needed to be sustained to enable the masses to benefit from economic improvements.

Trickle-down effect

The trickle-down effect does not happen overnight, said deputy presidential spokesperson Abigail Valte.

"There is no one-to-one correspondence. It takes some time, which is why the goal of the administration is to sustain the growth," she said.

"We are getting there. While it's a work in progress, we have to make direct interventions," she added, referring to conditional cash handouts to 3.9 million of the country's poorest households.

Balisacan said the first-quarter growth was the second-fastest growth rate for the Philippines since the 8.9-per cent growth in the first quarter of 2010.

The growth of the gross domestic product (GDP), the value of all goods and services produced by the economy in a given period, surprised even the government's own economic managers.

Balisacan, also director of the National Economic and Development Authority (Neda), said the growth from 6.5 per cent in the first quarter of 2012 was widely unexpected, beating market forecasts that settled at 6 per cent.

He said the 7.8-per cent growth rate beat even his own forecast.

"But please note that I was the most optimistic of all," he said, spurring a flurry of tweets and retweets.

"I said, 'Wow,' when I saw the number. That was the reaction, I think, of everybody who saw the number," Trade Secretary Gregory Domingo said in a text message.

"It was significantly higher than expected given the weakness in exports, but it just goes to show the strength in other areas.

Manufacturing showed its leadership, with almost 10 per cent growth, which is a very big accomplishment," Domingo said.

Economist Cid L. Terosa of the University of Asia and the Pacific said by text message that his own calculation of the GDP growth was about 6.6 per cent to 7 per cent.

"Election spending and consumption contributed a lot to the spectacular first-quarter growth. To sustain it, consumption spending must be supported by strong investment spending, trade performance and sustained remittance inflows," Terosa said.

Sergio R. Ortiz-Luis Jr., president of the Philippine Exporters Confederation Inc., said the growth was surprising given the weak exports market, but he added that election spending might have had some impact, even small.

Local business

Encouraging local businesses and local industries like mining would help the country sustain a 7-per cent to 8-per cent growth for the next 10 or so years, and this could curb poverty, Ortiz-Luis said.

The Manila Business Club attributed the strong first-quarter performance of the economy to the "sound macroeconomic foundations of the country, the capable leadership of our economic managers, and the steadily growing confidence of investors in the economy."

With the robust first-quarter growth, the club said the country was on track to achieMen's Tops