Philip­pines 7.1pc growth sur­prise may her­ald end of rate cuts

The Pak Banker - - Front Page -

MANILA

Philip­pine growth un­ex­pect­edly ac­cel­er­ated last quar­ter to the fastest pace since 2010 as government spend­ing and in­vest­ment in­creased, eas­ing pres­sure on the cen­tral bank to cut in­ter­est rates fur­ther. Stocks rose.

Gross domestic prod­uct in­creased 7.1 per­cent in the three months through Septem­ber from a year ear­lier, com­pared with a 6 per­cent gain in the pre­vi­ous quar­ter, the Na­tional Sta­tis­ti­cal Co­or­di­na­tion Board said in Manila to­day. The pace ex­ceeded all 22 es­ti­mates in a Bloomberg sur­vey, whose me­dian was 5.4 per­cent. The Philip­pines is forecast to be among the 10 fastest grow­ing economies this year, ac­cord­ing to a Bloomberg sur­vey. Pho­tog­ra­pher: Ju­lian Abram Wain­wright/Bloomberg

Pres­i­dent Benigno Aquino is in­creas­ing spend­ing to a record this year while seek­ing more than $17 bil­lion of in­vest­ment in roads and air­ports. The South­east Asian na­tion is forecast to be among the 10 fastest grow­ing economies in 2012, ac­cord­ing to a Bloomberg sur­vey, mak­ing it less likely that Bangko Sen­tral ng Pilip­inas will cut its bench­mark in­ter­est rate again in De­cem­ber. “The Philip­pines is go­ing to rock,” said Trinh Nguyen, a Hong Kong-based econ­o­mist at HSBC Hold­ings Plc. “The cen­tral bank and the government have made timely pol­icy ad­just­ments that are boost­ing trend growth. With mo­men­tum so strong, we think BSP will hold rates and mark the end of the eas­ing cy­cle.” The Philip­pine Stock Ex­change In­dex (PCOMP) erased ear­lier losses and rose 0.7 per­cent as of 11:44 a.m. in Manila trad­ing. The Philip­pine peso was lit­tle changed at 40.86 per dol­lar. It has risen more than 7 per­cent this year, the best per­former among Asia’s 11 most-traded cur­ren­cies tracked by Bloomberg.

Some Asian of­fi­cials have re­strained their stim­u­lus ef­forts as global ex­pan­sion slowed, with oth­ers re­frain­ing from in­ter­est-rate cuts to pre­serve fire­power should Europe’s debt cri­sis worsen. Thai­land may hold bor­row­ing costs to­day, econ­o­mists said, af­ter a man­u­fac­tur­ing pro­duc­tion in­dex rose in Oc­to­ber for the first time in five months. Mean­while, In­dia may report on Nov. 30 that GDP rose 5.3 per­cent last quar­ter.

Bangko Sen­tral “will be care­ful to cal­i­brate the use of its en­hanced pol­icy tool kit to help en­sure” domestic de­mand price pres­sures and risks from cap­i­tal flows are man­aged, cen­tral bank Gov­er­nor Amando Te­tangco said to­day.

“In the near-term, our pol­icy stance ap­pears to re­main ap­pro­pri­ate,” he said. Full-year growth may be 6 per­cent to 7 per­cent, Eco­nomic Plan­ning Sec­re­tary Arse­nio Bal­isacan said.

Moody’s In­vestors Ser­vice raised the coun­try’s credit rat­ing to one step be­low in­vest­ment grade in Oc­to­ber, lur­ing more pledges from com­pa­nies in­clud­ing Al­liance Global Group Inc. and First Gen Corp.

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