The last quarter of 2010 saw the Philippine economy accelerating to a 7.3 percent growth – the fastest since 1976, reports the National Statistical Coordination Board.
Economists, surveyed earlier by Bloomberg News, had forecasted a median growth of about 6 percent.
“This is an extension of the optimism that has followed the new government,” says Radhika Rao, an economist with Singapore-based Forecast Pte. “The central bank has managed to maintain benign inflation and that has contributed to better spending trends and positive consumption. Remittances haven’t taken a hit and these things contribute to strong domestic demand.”
In November, the peso climbed to its highest value in two years, but has since decreased after the central bank intervened by relaxing rules on foreign-exchange outflows and by capping the dollar supply in the market.
“Unless the government can carry out a more aggressive stimulus program and encourage the private sector to invest, it will be a big challenge to replicate the performance last year,” comments Emilio Neri, economist at the Bank of the Philippine Islands, one of the country’s oldest and biggest banks.
Philippine president Benigno Aquino III has extended the tenure of the incumbent central bank governor, with Aquino saying that he had “confidence” in the governor. The central bank has managed to keep inflation below 5 percent for the past two years.