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Philippine Economic Growth Accelerates In Q4

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The Philippine economy expanded at a faster pace in the fourth quarter driven by government spending, but missed the government's full year growth target, data from the Philippine Statistics Authority revealed Thursday.

Gross domestic product grew 6.4 percent on a yearly basis in the fourth quarter, faster than the 6 percent expansion logged in the third quarter. The rate came in line with expectations.

However, the full year growth came in at 5.9 percent versus the government's target of 6-6.5 percent. This was the slowest annual expansion since 2011.

The fourth quarter growth was underpinned by a sharp 18.7 percent increase in government spending. Among other components of GDP, the household expenditure growth improved to 5.6 percent from 5.3 percent.

Investments in construction grew 11.8 percent, while investments in capital formation for durable equipment declined 5.9 percent.

Exports of goods grew 1.4 percent and that for services climbed 4.5 percent. At the same time, imports of goods fell marginally by 0.1 percent and imports of services logged 1.9 percent growth in the fourth quarter.

The production- side breakdown of GDP showed that the service sector posted the fastest growth of 7.9 percent. Industry grew 5.4 percent and farm output registered 1.5 percent expansion.

The growth less than government target and damage from the recent volcanic eruption could prod the central bank to cut policy rates sooner rather than later, Nicholas Mapa, an ING economist said.

The economist continues to pencil in a 25 basis point rate cut at the February 6 meeting given the disappointing growth numbers.

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