MANILA, May 27 (Reuters): The Philippine economy probably grew the most among its regional peers in the first three months of the year, driven by private consumption and post-typhoon rebuilding that could continue to bolster expansion ahead.
Hefty spending on major roads, bridges and other projects is also seen underpinning growth throughout the year, as the Aquino administration makes improving infrastructure a key part of its plans to create jobs and attract more investment in the Southeast Asian country.
"The Philippines remains one of the brightest spots if not the brightest," said Vishnu Varathan, a Singapore-based economist at Mizuho Corporate Bank. "Momentum is strong."
Gross domestic product likely rose a seasonally adjusted 1.9 per cent in January-March from the previous quarter, a Reuters poll of analysts showed, up from 1.5 per cent growth in October-December and the fastest quarter-on-quarter expansion since the first quarter last year.
Compared with a year earlier, gross domestic product (GDP) growth is expected to have slowed slightly, to 6.4 per cent from 6.5 per cent in October-December, largely due to a high base in the first quarter of 2013 when spending related to congressional elections boosted the economy.
Still, that would exceed year-on-year growth in Malaysia, Indonesia and Singapore during the quarter, while Thailand's economy contracted due to prolonged political unrest in that country. The GDP data for the Philippines will be released on Thursday.
Under President Benigno Aquino's reform drive, the Philippines has shrunk its budget deficit and raised its infrastructure spending, winning its first investment grade ratings from all three major debt watchers last year.
The latest data shows that the government has disbursed nearly 50 billion pesos ($1.2 billion) for infrastructure and capital outlays in the first two months of this year, up more than 49 per cent from a year earlier.
That is separate from the 32.2 billion pesos in funds disbursed for typhoon reconstruction as of May 15, including for rebuilding power lines and public hospitals and schools hit by the devastating storm last November.
Private consumption has remained robust, buoyed by the continued increase in dollar remittances from Filipinos working and living overseas and a rising middle class driven largely by a growing business process outsourcing sector.
Exports are also seen lifting first-quarter growth. They rose 6.5 per cent from a year earlier in the first three months of 2014, with shipments in March alone reaching the highest value in at least a year, previously reported data has shown.
Risks to growth this year include the El Niño dry weather phenomenon affecting farming and hydropower-dependent rural areas, as well as global financial headwinds that could put pressure on monetary policy, said Emilio Neri, economist at Bank of the Philippine Islands in Manila.
At its May 8 meeting, the central bank kept its benchmark interest rate at a record-low 3.5 per cent but raised banks' required reserves by another 1.0 percentage point to mop up excess liquidity. Its next policy review is on June 19.
Analysts expect full-year economic growth of 6.6 per cent, below last year's actual 7.2 per cent expansion, Southeast Asia's fastest. The median estimate is within the government's 6.5 to 7.5 per cent growth target for this year.
