Philippine growth surges to three-year high on election spending

[MANILA] The Philippine economy grew at the fastest pace in almost three years last quarter, spurred by spending ahead of the May elections.

Gross domestic product increased 6.9 per cent in the three months through March from a year earlier, Philippine Statistics Authority said in Manila Thursday. That was in line with the median estimate in a Bloomberg survey of 16 analysts, and compared with expansion of 6.5 per cent in the previous quarter.

Incoming President Rodrigo Duterte has pledged to retain the economic priorities of the outgoing administration of Benigno Aquino, policies that led to the nation's first investment-grade ratings and its best period of growth since the 1970s.

The economy is forecast to remain among the fastest-growing in the region this year, underpinned by remittances from Filipinos abroad and expansion in outsourcing industries, such as call centers.

"The Philippines will outperform in the region this year, driven by domestic demand," Joseph Incalcaterra, a Hong Kong based economist at HSBC Holdings Plc, said before the report.

"Increased infrastructure spending, strong remittances in peso-terms and consumption spending - all these are telling us a robust growth story."

Philippine stocks surged to a nine-month high this week. The peso is the best-performing Asian currency this month, rising 0.3 per cent.

The central bank this week cut its benchmark rate to a record-low of 3 per cent, narrowed the band around it and introduced a new deposit tool, as part of moves to strengthen monetary policy.

BLOOMBERG