Philippines fastest-growing economy in developing Asia

A bird's eye view of a building under construction in Manila on Thursday. (AFP photo)

MANILA - The Philippine economy grew at its fastest pace in three years last quarter, underscoring the nation’s resilience to global risks as investment surged and consumers spent more.

Gross domestic product increased 7.1% from a year earlier, the Philippine Statistics Authority said in Manila on Thursday. The median estimate of 15 economists surveyed by Bloomberg was 6.7%.

Compared with the previous quarter, GDP rose 1.2%, in line with economists’ estimates

Undeterred by risks such as Donald Trump’s protectionist ambitions and President Rodrigo Duterte’s rants against the US, the Philippine economy is set to expand more than 6% until 2018 to rank among the fastest-growing in the world, accordng to economists surveyed by Bloomberg.

Last quarter’s growth exceeded China’s 6.7% and Vietnam’s 6.4% in the same period. India, which posted growth of 7.1% in the second quarter, is yet to publish GDP data for the three months through September.

Gifted with a young population and backed by $50 billion of revenue from remittances and outsourcing, the Philippines is getting an additional boost from Mr Duterte’s $160-billion infrastructure plan aimed at creating jobs. Projects include at least $1 billion of contracts to build an airport and a railway to transform a former US military base into a commercial hub.

Philippine stocks rose a second day, climbing as much as 2.2%. They were up 1.1% as of 1101am in Manila.

The peso was little changed at 49.32 per dollar.

"Philippines will remain an outperformer in the region," said Rahul Bajoria, a senior economist at Barclays Plc in Singapore. "It is domestically driven, with consumption holding up quite well and the fiscal spending being planned. The global risks we’re seeing including to trade won’t fundamentally alter its prospects.

"In the short term at least, we expect the economy will continue growing at a decent pace," Gareth Leather, senior Asia economist at Capital Economics Ltd in London, said in a note. "The foundations are in place for growth to remain strong, but recent political events, both in the US and domestically, have made the outlook much less certain."

"Putting money on infrastructure-related stocks is the smart bet and it’s exactly what I am doing," said John Padilla, who helps manage about $9.1 billion at Metropolitan Bank & Trust Co, the Philippines third-largest money manager. "This growth poses now more challenge for President Duterte to keep the pace. It supports the view that Philippines needs infrastructure to sustain this growth."

Household spending, which makes up about 70% of GDP, rose 7.3% from a year earlier. Government spending gained 3.1% and investment surged 20%.