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PHL economy bounces to 6.9% in Q4, 2nd fastest growing Asian economy in 2014

(UPDATED 6:05 p.m.) The Philippine output rebounded sharply in the fourth quarter last year, growing as the second fastest economy in Asia—next to China—for the whole of 2014.
This is on the back of the robust growth of the three productive sectors and the fulfillment of government's promise to ramp up public spending, the country's chief economist said.
The gross domestic product (GDP) in the fourth quarter expanded by 6.9 percent, bouncing from the disappointing 5.3 percent in the third quarter, National Statistician Lisa Grace S. Bersales announced in a briefing in Makati City Thursday.
The Philippines was the third fastest growing economy for the period, next to China's 7.3 percent and Vietnam's 7 percent.
Annual GDP rose 6.1 percent, slower than the 7.2 percent growth posted in 2013. As expected, the full-year output is below the 6.5 to 7.5 percent government target for the year.

This was also the slowest growth in three years and the second slowest under this administration, Bank of the Philippine Islands (BPI) lead economist Emilio Neri Jr. said in a research note.
However, the Philippines posted the second fastest growth in Asia last year, next to China's 7.4 percent, said Balisacan, who is also the director-general of the National Economic and Development Authority (NEDA).
"Growth in the fourth quarter appears to be broad-based as all three major productive sectors—the agriculture, industry, and services sectors—have shown positive and tobust growth during the period," he said.
"Moreover, the government stood by its commitment to ramp-up and catch up with its spending as we approached the last three months of 2014," he added.

In an e-mailed statement, Department of Budget and Management secretary Florencio Abad said government spending climbed by 9.8 percent, due to "agencies' efforts to utilize their NCAs (notice of cash allocation) effectively."
"The improvement of public expenditures was also aided by the timely release of employee bonuses in the last leg of 2014, including the Year-End Bonus and the Productivity Enhancement Incentive (PEI)," he noted.

Reassessment of forecasts
In an e-mailed statement, Department of Finance secretary Cesar Purisima said the country's output in the fourth quarter and for the full year "resoundingly affirm" its upward growth trajectory buoyed by strong macroeconomic fundamentals.
"Despite the challenging external environment in the global economy, both the Q4 and full year growth rates exceeded market expectations, lodging the Philippines firmly among the three fastest growing countries in Asia," he said.
With the underlying strength of domestic aggregate demand, the Bangko Sentral ng Pilipinas (BSP) may have to reassess economic forecasts, governor Amando Tetangco Jr. said in a text message to reporters Thursday.
"We will refresh our forecasts to include this new development, oil price expectations, shifts in interest differentials and global investor sentiment and assess if there's any change in the balance of risks to inflation, then formulate adjustments to policy stance as needed," he said. 

Steady policy rates 
However, monetary authorities are expected to hold policy rates steady in the next few meetings after a strong showing in the fourth quarter, ING Bank Manila senior economist Joey Cuyegkeng said in another research note.
"The likelihood of a policy easing would now have to come from most Asian central banks easing monetary policy to support their economies especially those that are export oriented," he said.
"If Philippine peso remains an outperformer and that policy setting are seen to remain steady in contrast to easing of other Asian central banks, then BSP may have a reason to ease policy settings to maintain a steadier relationship with other Asian currencies," 
BPI's Neri also said monetary authorities will only contemplate cutting rates if they see that 2015 and 2016 inflation data stay below 2 percent for a prolonged period.
"The BSP may, in fact hike rates in the second half if oil prices surprisingly rebound and headline Philippine inflation prints start exceeding 4 percent by fourth quarter. A mild hike in BSP policy rates could also be spurred by US Federal Reserve policy tightening move later this year," he said.—KG/NB/JST, GMA News