Philippine economic growth surges, fuelling rate hike talk

Manila: The Philippine economy was one of Asia’s best performers in the first quarter of 2018, data showed on Thursday, but the strong growth has fuelled speculation the central bank will be forced to lift interest rates.
The 6.8 per cent expansion, which tied it with China and was only eclipsed by Vietnam, was boosted by a surge in government spending under President Rodrigo Duterte.
Philippine growth, which was four percentage points higher than same period last year, has now come in at 6.5 per cent or better for 10 successive quarters.
“The Philippines remains one of the best performing economies in the region,” Economic Planning Secretary Ernesto Pernia told reporters.
“If not for the… increase in inflation, real GDP (gross domestic) growth could have been closer to the high end of our growth target of 7.8 per cent,” he added.
As part of his “Build, Build, Build” initiative, Duterte has pushed spending to a record high.
He is taking aim at bridges and public transit in a drive to unclog Manila’s notorious traffic, while also building another international airport north of the capital.
However, inflation is at a five-year high of 4.5 per cent and the central bank is expected to step in to bring it under control, with eyes on a policy board meeting later on Thursday.
Its benchmark interest rate is at a record low of three per cent.
Capital Economics analysts warned rising prices, along with weak export growth and sluggish investment pose a risk to the high-growth trajectory. — AFP