Wednesday, January 30, 2008

Philippine GDP Q4 2007

The Philippine economy grew faster than expected in the fourth quarter, taking full-year growth to a 31-year high of 7.3 per cent and sowing some doubts about the size of monetary easing expected later on Thursday. Officials said the economy grew a seasonally adjusted 1.8 per cent in the final quarter of 2007 from the previous quarter. The figure came above a 1.7 per cent rise expected by analysts and pushed full 2007 growth well above the 7.0 per cent figure forecast in a Reuters poll.

The government maintained a 2008 growth target of 6.3-7.0 per cent despite the expected slowdown in the United States, the Philippines’ largest trading partner.

Expectations that the country’s growth momentum will carry forward well into 2008 made some analysts trim their expectations for the central bank’s policy meeting later on Thursday and bet on a 25 basis point interest rate cut rather than a steeper 50 basis point reduction.

Philippine interest rates are now at a 15-year low after four cuts last year, but markets expect the central bank to cut rates further to shield the economy from a global slowdown.

Inflation hit an 11-month high of 3.9 per cent last month, but the central has voiced confidence it will keep price growth within its 2008 target of 3-5 per cent.

An 8.7 per cent surge in annual output of the services sector, the highest in more than half a century, underpinned 2007 growth, officials said.

They said the economy grew by a revised seasonally adjusted 1.0 per cent in the July to September quarter. Compared with a year earlier, the economy grew 7.4 per cent in the fourth quarter.

”In an environment of benign inflation, low interest rates and a strong peso, the Philippine economy turned in its best performance in 31 years,” said Romulo Virola, the secretary-general of the National Statistics Coordination Board.

The actual growth data came at the upper end of the government’s most recent forecast of 6.7-7.8 per cent growth in the fourth quarter from a year earlier and 6.9 to 7.3 per cent full-year expansion in 2007.

Gross national product, swelled by money sent home by Filipinos working overseas, grew 6.5 per cent in the fourth quarter from a year earlier and 7.8 per cent in the full year, also a 31-year high.